Gold Price Prediction – Prices Edge Higher but are Vulnerable

 

Gold prices edged higher on Tuesday but remained in a downward sloping range. Softer than expected US housing data helped yield edge lower which buoyed the Euro and helped gold prices gain traction. Hedge funds continued to add to a long position in futures and options according to the latest commitment of trader’s report. Open interest that long outnumbers open interest that is short, by nearly 10-1 which leaves the futures market vulnerable to long liquidation.

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Technical Analysis

Gold prices rebounded on Tuesday and tested resistance near the 10-day moving at 1,466. Additional resistance is seen near the 50-day moving average at 1,488. Support is seen near the November lows at 1,443. A breakdown below this level would lead to a test of the August lows at 1,400. Short term momentum is neutral to negative and has consistently reversed multiple times as prices have moved sideways to lower. The fast stochastic generated a crossover sell signal and is now poised to generate a crossover buy signal. Medium-term momentum is neutral and turning negative as the MACD (moving average convergence divergence) histogram is accelerating lower after moving toward the zero-index level.

New Home Sales Fall

The US Commerce Department reported that sales of new single-family homes unexpectedly fell in October. New home sales dropped 0.7% to an annual rate of 733,000 units last month, held down by decreases in activity in the South and Northeast regions. September’s sales pace was revised higher to 738,000 units, the highest since July 2007. Expectations were for new home sales to rise by 1.1% to a pace of 709,000 units in October.  Sales surged 31.6% from a year ago.