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Gold Price Prediction – Prices Rise Forming Bull Flag Pattern

David Becker

Gold prices rebounded on Wednesday as riskier assets and yields continued to whipsaw. The US 10-year yield hit a fresh all-time low at 1.294 before rebounding and closing at 1.33%. The markets remain skittish which buoyed the yellow metal as a new case of coronavirus was discovered in the US. President Trump is expected to hold a press conference this evening to describe to the American people how the US government will handle the coronavirus. US single-family home sales surged to a fresh 12-year high as mortgage rates continued to decline following treasury yields lower. Gold implied volatility, represented by the GVZ index calculated by the Chicago Board of Options Exchange, surged declined 7% after rallying 5% on Tuesday climbing 9% Monday.

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Technical Analysis

 

Gold prices moved higher and are forming a bull flag continuation pattern. This is a pause that refreshes higher. Target resistance on gold prices is seen near the 2012 highs at 1,792. Support is seen near the 10-day moving average at 1,615. Short term momentum has turned negative as the fast stochastic recently generated a crossover sell signal. The current reading on the fast stochastic is 67, declining from overbought territory which reflects decelerating positive momentum. The MACD histogram is printing in the black with a declining trajectory which points to lower prices.

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Home Sales Surge

The commerce department reported that US single-family homes raced to a 12-year high in January. New home sales jumped 7.9% to an annual rate of 764,000 units last month, the highest level since July 2007. December’s sales pace was revised up to 708,000 units from the previously reported 694,000 units. Expectations had been for new home sales, which account for about 12.3% of housing market sales, would advance 3.5% to a pace of 710,000 units in January.

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