Gold Price Prediction – Prices Slip and Fail to Gain Traction

Gold prices moved lower on Wednesday and continue to struggle. Despite a robust selloff in riskier assets, gold has failed to live up to its safe-haven status. The 10-year edged slightly higher and the dollar rebounded which likely generated headwinds for the yellow metal. The World Health Organization declared the coronavirus a pandemic, as the virus continues to spread around the globe. US consumer prices barely edged higher in February and is likely to ease further in March.

 

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Gold prices continued to face downward pressure unable to gain traction despite a huge selloff for the major equity indices on Wednesday. Prices pushed through short term support near the 10-day moving average at 1,640, which is now seen as resistance and is poised to test the February 25 lows at 1,625. Additional support is seen near the 50-day moving average at 1,587.

Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 66, below the overbought trigger level of 80. The MACD (moving average convergence divergence) index is poised to generate a crossover sell signal. The MACD histogram is also fast approaching the zero index level, which would generate a crossover sell signal.

The Labor Department reported that the US consumer price index ticked up 0.1% last month, matching its January increase. Prices rose 2.3% compared with a year earlier. Excluding food and energy prices increased by 0.2% in February and 2.4% compared with a year earlier. Services, continue to be the main drivers of price gains. Medical care costs have increased by 5.3% in the past year, while rents rose 3.3%.