Gold Price Prediction – Prices Rise forming Cup and Handle Pattern

Gold rallies despite surge in the greenback
David Becker

Gold prices moved higher and appear to be forming a cup and handle pattern. This is a pause that eventually refreshes and moves to higher prices. US yields were nearly unchanged but the dollar moved higher which is counter intuitive. Usually when the dollar rises in value gold prices slump. On Friday, but rallied.  Geopolitical risks continue to linger but are unable to stock the flow into riskier assets like stocks.

Technical Analysis

Gold prices moved higher on Friday, finishing the week nearly unchanged. Last week the markets rejected higher prices and end at the same level. This week the downside was tested and prices rallied to close the week unchanged. Prices edged back above resistance now short term support near the 10-day moving average near 1,557. Target resistance is now seen near the January highs at 1,611.  Additional support on gold prices is seen near the November highs at 1,517, and then the 50-day moving average at $1,491. This appears to be part of a cup and handle pattern.  

Momentum is neutral. The RSI is moving in tandem with prices and appears to be bottoming and poised to rise. Negative momentum on the fast stochastic is decelerating and the fast stochastic is poised to generate a crossover buy signal. Medium-term momentum is negative to neutral as the MACD (moving average convergence divergence) index is poised to generate a crossover sell signal. The MACD histogram is poised to slip through zero index level which is also considered a crossover sell signal.

The Federal Reserve reported that manufacturing production rose 0.2% in December following a revised 1.0% increase in November. Overall industrial output fell 0.3% in December. Excluding motor vehicles and parts, industrial production in December was flat and manufacturing rose 0.5%. Expectations were for overall industrial output and manufacturing output would fall 0.2% in December. On an annualized basis production at factories fell 1.3%.

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