Gold Price Prediction – Prices Slide on Stronger Dollar and Negative Technicals

Gold prices continued to fall on Monday dropping through the 1,290 level. The dollar continued to gain ground early despite the comment from President Trump that he does not want to see a stronger greenback. Late in the trading session, the dollar moved lower following soft than expected US economic data. The drop in the dollar failed to buoy gold prices which closed near the lows of the trading session. The ECB is scheduled to meet this week and a dovish hold is in the cards. Unless there is some bearish commentary its hard to see the Euro rallying following the ECB meeting.

Technical Analysis

Gold prices dropped through the 1,290 level and are poised to continue to slide lower. Support is seen near the January lows at 12,276, and then an upward sloping trend line that comes in near 1,243. Resistance is seen near the 50-day moving average at 1,300. Medium term momentum is negative as the MACD (moving average convergence divergence) index recently 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 is printing in the red with a downward sloping trajectory which points to lower prices.

The fast stochastic has tumbled reflecting accelerating negative momentum. The current reading on the fast stochastic is 12, well below the oversold trigger level of 20 which could foreshadow a correction. The quick negative acceleration in prices could see a rapid rebound, especially if US data continues to deteriorate.

The ECB Meets This Week

ECB meeting Thursday of the week in Europe.  They are expected to deliver dovish commentary, meaning rates will remain unchanged and the ECB commentary will be dovish. The staff projections are likely to reflect the deteriorating growth outlook.