Gold Price Prediction – Prices Drop Sharply Despite Fed Liquidity Annoucement

Gold prices tumbled and the dollar surged as the Fed announced a form of quantitative easing as they plan to bulk up their balance sheet. The ECB also left rates unchanged and reported that they would increase their asset purchases. Riskier assets continued to tumble as the coronavirus made its way through the United States. This week has been a bloodbath for stocks globally, but gold has remained buoyed but was unable to break out. Gold prices have made an outside week this week making a higher high and then a lower low and is poised to generate a lower close.

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Gold prices tumbled on Thursday, despite a huge selloff in riskier assets, dropping to support levels. Prices bounced at 1,570 but was unable to recapture the 50-day moving average which is now seen as short term resistance at 1,634. Additional resistance is seen near the 10-day moving average at 1,634.

 

Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 42, in the lower end of the neutral range. The MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram sliced through the zero-index line which reflects accelerating negative momentum.

The FED said it would inject more than $1.5 trillion of temporary liquidity by purchasing bonds. The Fed said it had made the changes for short-term funding markets following instructions from Chairman Jerome Powell, who was in consultation with the rate-setting Federal Open Market Committee.