Gold Price Prediction – Prices Fall as Positive Momentum Decellerates

Gold prices moved lower for a 3^rd consecutive trading session slipping at the dollar moved higher. Prices dropped from its bull pennant pattern but were able to hold just above short-term support. US yields moved lower across the interest rate curve, which did not impact the rally in the greenback. Hedge funds continued to add to long position in futures and options and reduce short positions, but not at the highs which have made it so prices are having a difficult time breaking through resistance.

 

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Technical Analysis

 

 

Gold prices moved lower on Tuesday breaking down slightly and falling out of a bull pennant pattern. Prices slipped through support near the 50-day moving average at 1,590 which his now short term resistance.  Target resistance on the yellow metal is seen near the March highs at 1,700. Support is seen near the 10-day moving average at 1,572. Short term momentum is moderating as the fast stochastic begins to move toward the signal line reflecting consolidation. Medium-term momentum has also turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. The MACD histogram also generated a crossover buy signal, but the trajectory is now flattening which reflects consolidation. The short stochastic is poised to generate a crossover sell signal.

Hedge Funds Add to Long Positions

According to the latest commitment of trader’s report released for the date ending March 24, 2020, managed money increased long position in futures and options by 14K contracts while reducing short position in futures and options by 8K. Open interest that is long is more than 200K compared to 2K that is short, which makes it difficult for prices to rise.