Gold Price Prediction – Prices Fall Following Bear Flag Pattern Despite Drop in the Greenback

Gold prices moved lower after rising for 3-consecutive sessions and gave back all of last week’s gains. The selloff in the greenback did not help the yellow metal gain traction. U.S. Yields moved lower in the wake of the Fed’s monetary policy decision on Wednesday and softer than expected Jobless claims were released by the Labor Department on Thursday.

Technical analysis

Gold prices fell and could not escape the bear flag pattern. This pattern is a continuation event that pauses before it refreshes lower. Prices remained below resistance seen near the 10-day moving average, at 1,774. Target support is seen near the August lows at 1,677. The 10-day moving average has crossed below the 50-day moving average, which means that a short-term downtrend is now in place. Short-term momentum has reversed and turned negative as the fast stochastic generated a crossover sell signal.

Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover signal. This sell signal 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 negative territory with a downward sloping trajectory which points to lower prices.

Jobless Claims Rise

Initial claims for the week ended September 18 totaled 351,000, an increase from the previous week’s upwardly revised 335,000 and above expectations of 320,000. The total was the highest since the week of August 21. Continuing claims data, which runs a week behind, also increased, rising 181,000 to total more than 2.84 million.