Gold Price Prediction – Prices Slip as Dollar Rises and Riskier Assets Gain Traction

Gold prices moved lower on Tuesday reversing the prior days’ rise. There was a reversal of a breakout of a cup and saucer pattern, as prices made a lower high and a lower low. Risker assets rebounded which reversed some of the demand for safe-haven assets. The circulation of the coronavirus that has spread throughout Wuhan China, continues to help buoy gold prices. The President was on the tape on Tuesday taking down US interest rates. US consumer confidence grew more than expected and US business investment also remains buoyed.

 

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Technicals

 

 

 

 

Gold prices reversed course on Tuesday trying to nullify a cup and saucer continuation pattern. This is generally a pause that refreshes higher. Short-term support is seen near the 10-day moving average at 1,556. Resistance is seen near the January highs at 1,611. The movement of the relative strength index (RSI) is positive tumbled from the overbought territory and an upward sloping trajectory to moving below the overbought trigger level which is generally a bearish sign. The current reading of 64, is below the overbought trigger level of 70.

 

Medium-term momentum has flip-flopped as the MACD (moving average convergence divergence) index generated a crossover buy 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 is points to lower prices.

Consumer Confidence Rises More than Expected

The conference board reported on Tuesday that consumer sentiment increased more than expected in January as the outlook around the labor market improved. The Board’s consumer confidence index rose to 131.6 this month from 126.5 in December. Expectations were for consumer confidence to rise to 128. The data released showed 49% of consumers think U.S. jobs are plentiful, up from 46.5%. Those saying jobs are hard to get decreased to 11.6% from 13%.