Gold Price Prediction – Prices Push Higher as Market Focuses on CoronovirusGold prices benefit from safe-haven flow
Gold prices moved higher on Friday as the markets continued to absorb the potential effects of the coronavirus that is spreading throughout China. A second case was uncovered in the United States ahead of the weekend. The dollar moved higher against most major currencies despite declining US yields that fell across all tenors. Riskier assets started to sell off as investors use the excuse of the spread of the coronavirus to take profits.
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Gold prices moved higher pushing upward from 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 1,557. Resistance is seen near the January highs at 1,611. The movement of the relative strength index (RSI) is positive and shows that the trend is moving higher with accelerating positive momentum. 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.
China has increased its efforts to contain the new coronavirus. Travel has been restricted covering at least ten cities. China appears to be responding in a more transparent way than the experience with SARS in the early 2000s. Market participants are already turning their attention to the possible economic fallout.