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Gold Price Prediction – Prices Rebound Despite Huge Dollar Rally

David Becker

Gold prices moved higher on Tuesday despite a surge in the US dollar. US yields rose, as the Fed announced that it was providing a lending facility in commercial paper that will be used for small businesses to extend credit lines. The facility will be available directly to banks. In addition, the White House announced a fiscal policy that was geared to employees that will be directly affected by social distancing. The administration is proposing a bill that will provide business interruption money, that will directly pay individuals that are out of work because they are ordered to stay home. The treasury secretary also announced that individuals that owe taxes in April will have a 90-day period to hold on to the money without penalties or interest.

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Gold prices rebounded after sharply on Monday, testing Monday’s low below the 200-day moving average but unable to make a lower low, which generated an inside day. Prices rebounded back above the 200-day moving average which is now seen as support at 1,499. Resistance is now seen near the 10-day moving average at 1,587. Short term momentum is negative as the fast stochastic recently generated a crossover sell signal.

Short term momentum is turning positive as the fast stochastic generated a crossover sell signal in oversold territory. The current reading on the fast stochastic is 22, coming from an oversold reading of 15.

Medium-term momentum is 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 below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram sliced through the zero-index line which reflects accelerating negative momentum. The MACD accelerated to the lowest level seen since September of 2011.

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