Gold Price Prediction – Prices Rebound From Support Forming Continuation Pattern

Gold prices rebounded on Friday, after dropping sharply on Thursday. Profit taking began on Wednesday, and prices eased during the latter part of the week. The dollar remains stable, despite rebounding yields. With the Fed likely on the sidelines for the balance of 2019, assets such as gold that produce no yield become more attractive. Low growth in Europ was confirmed with Germany’s flat Q4 growth. Japan reported that headline inflation dropped year over year.

Technical Analysis

Gold prices rebounded as the yellow metal tested support near the 10-day moving average at 1,321. Prices appear to be forming a bull flap patter which is a pause that refreshes higher. Additional support is seen near the 50-day moving average at 1,292. Short-term momentum has turned negative. The fast stochastic generated a crossover sells signal in oversold territory. The current reading of 61, is within the middle of the neutral range which points to consolidation. Medium term momentum is turning negative. The MACD (moving average convergence divergence) index is poised to generate 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 trajectory of the MACD histogram is flat which reflects consolidation.

Low Growth in Europe Could Buoy Gold Prices

Low growth in Europe was confirmed as Germany, the EU’s largest economy, confirmed its zero growth for Q4 GDP.  Consumption and investment rose 0.2% and 0.9% respectively but appeared to be offset by a decline in inventories.  German government spending surged in Q4 by 1.6%, the strongest since Q1 16.   Separately, Germany’s IFO February survey showed no improvement in sentiment.  The sense of the current climate eased to 98.5 from 99.3.  Expects slipped to 93.8 from 94.3,  the lowest since 2012.   The overall assessment deteriorated to 103.4 from 104.5, a fresh two-year low.