Gold Price Prediction – Prices Edge Higher Following ECB Decision

David Becker

Gold prices moved higher on Thursday following a decision by the ECB  to keep rates unchanged. The dollar moved higher against most major currencies despite declining US yields that fell across all tenors. The ECB also announced that it would examine its bond corporate holdings to take into account climate change.

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Gold prices edged higher but continued to move sideways on Thursday while forming a cup and saucer continuation pattern. This is generally a pause that refreshes higher. Short-term support is seen near the 10-day moving average at 1,556. Resistance is seen near the January highs at 1,611. Short-term is negative to neutral as the fast stochastic heads lower after reversing a buy signal. The trajectory of the fast stochastic is flattish, which also means potential consolidation. The relative strength index (RSI) is moving sideways but higher which reflects both consolidation and a rising trend. Medium-term momentum has turned negative as 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 above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the-red with a declining trajectory which points to lower prices.

The European central bank kept its loose policy unhanged on Thursday, said it would reconsider the inflation target that defines its core price-stability mandate, along with the effectiveness and potential side-effects of the tools used to achieve it. In addition to keeping rates unchanged the ECB will examine whether it should alter its 200 billion euro corporate bond holdings to take account of climate change, Christine Lagarde promised she would launch its first strategic review in 16 years.

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