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Gold Price Prediction – Prices Slip and Continue to Form Bull Flag

Gold prices consolidate as risk off fades
David Becker

Gold prices moved lower on Monday, as riskier assets continued to gain traction and allowed traders to continue to take profits. The EUR/USD moved higher on Monday despite data from the Atlanta Fed that showed that the US economy is performing better than forecast during the Q4 of 2019. Gold volatility continued to slide pushing the GVZ back down to the lows experienced last week. Hedge funds continue to add to long position in futures and options according to the most recent commitment of trader’s report.

 

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Technical Analysis

Gold prices edge lower and held support near the 10-day moving average at 1,547. Target resistance is now seen near the January highs at 1,611.  Prices appear to holding in just above the most recent breakout level and forming a bull flag continuation pattern. While short term daily momentum is easing, weekly momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. The daily RSI has declined and pushed back through the overbought trigger level of 70, showing accelerating negative momentum.  The fast stochastic is also accelerating lower. The daily MACD is poised to generate a crossover sell signal, but the current reading in the black with a downward sloping trajectory points to consolidation.

The US economy is accelerating more than economists expected in the Q4.  The Atlanta Fed’s GDPNow model estimates Q4 GDP growth at 2.3% year over year growth. This compares to the NY Fed’s Nowcast model has Q4 growth at 1.1% down from 1.2% previously, while its estimate for Q1 growth was steady at 1.2%.

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