Gold Price Prediction – Prices Tumble as Riskier Asset Gain Traction

Gold prices tumbled and the dollar gained traction as Brexit concerns hit the Euro and the Pound. US yields moved higher as riskier assets like stocks climbed, taking some of the risk premia out of the gold market. Tensions surrounding the US dollar are rising. The US Commerce Department is pushing for the authority to issue tariffs if it believes another country is illegally making their currency cheaper. US factor order surge in December rising to a fresh 18-month high.

 

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Technical Analysis

 

 

 

 

Gold prices tumbled on Tuesday dropping 2.3% and slicing through support near the 20-day moving averaged at 1,563, which is now seen as resistance. Target support is seen near the 50-day moving average at 1,517.  Target resistance is seen near the January highs at 1,611.

Short term momentum has turned negative. The fast stochastic generated a crossover sell signal and is now accelerating lower. The RSI (relative strength index) generated a divergence not able to make fresh higher when prices did and is now accelerating lower, after touching oversold levels. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Factory Orders Surge

Factory orders increased 1.8% in December, according to the Commerce Department which was the largest gain in 18-months. Expectations were for a 1.5% increase. November was revised down to show orders tumbling 1.2% instead of dropping 0.7% as previously reported. Factory orders fell 0.6% in 2019. Shipments of manufactured goods rose 0.5% in December after gaining 0.3% in November. Durable goods orders climbed 2.4%, while nondurable goods increased by 1.1%.