Gold Price Prediction – Prices Retrace but Are Poised to Refresh

Gold prices moved lower on Tuesday as the dollar moved higher and yields back up. Prices eased after not being able to break out on Monday as riskier assets like the Dow Industrial Average fell more than 2K points.  The 10-year yield backed up and rose 18-basis points after hitting 33-basis points on Monday which was an all-time low. Investors have now baked in a 50-basis point interest rate cut when the Fed meets again in 2-weeks. This follows the emergency interest rate cut the Fed announced on Tuesday, which cut 50-basis points from the Fed Fund rate. The US dollar rebounded sharply as riskier assets gained traction.

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Gold prices reverse course after hitting a fresh 7-year high on Monday. Prices pushed through the February highs hitting 1,704, but were unable to hold support and dropped on Tuesday. Short term support is seen near the 10-day moving average at 1,642. Additional support is seen near the 50-day moving average at 1,587.

Medium-term momentum is turning neutral. The MACD (moving average convergence divergence) MACD histogram is printing in the black with a flattening trajectory which points to consolidation. The fast stochastic generated a crossover sell signal in overbought territory which points to accelerating negative momentum. The current reading on the fast stochastic is 79, just below the overbought trigger level of 80. Gold prices are likely to continue to grind higher if prices are able to hold the 10-day moving average.

Quarantine Starts in the US

The first steps to a coronavirus quarantine happened on Tuesday in New York. Governor Andrew Cuomo said New York would establish a containment area in the town of New Rochelle in Westchester New York right outside the city. The area would close facilities, including schools, within one mile of the center of the outbreak for two weeks, starting Thursday.