Gold Price Prediction – Prices Tumble and Form Head and Shoulder Pattern

Gold prices tumbled on Thursday and appear to be forming a head and shoulder reversal pattern. Gold prices dropped as the Euro tumbled, as the dollar gained traction against most major currencies. Yields in both Europe and the US rebounded after hitting fresh lows for the move. Ten year bund yields continue to trade below zero, hitting a fresh low of negative 8-basis points, the lowest its been since September 2016. So, if you want to lend the German government money for 10-years, you need to pay them. US jobless claims dropped another 5K which was more than expected.

Technical Analysis

Gold prices dropped sharply on Thursday, declining more than $17 per ounce or 1.33%. A strong dollar paved the way for lower gold prices.  Prices appear to be forming a head and shoulder reversal pattern. Support is seen near an upward sloping trend line that connects the lows in January to the lows in February and comes in near 1,283. A break of this neck line could acceleration to the downside.

Resistance is seen near the 50-day moving average at 1,307. Momentum has turned negative as the MACD (moving average convergence divergence) index 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 and accelerating positive momentum. The fast stochastic recently generated a crossover sell signal and is moving lower reflecting accelerating negative momentum.

Jobless Claims Were Stronger than Expected

Jobless claims dropped 5k to 211k for the week ended March 23, according to the Labor Department. Data for the prior week were revised to show 5k fewer applications received than previously reported. Expectations were for an increase to 225K. The four-week moving average of initial claims, fell 3,250 to 217,250 last week.