Gold Price Prediction – Prices Tumble Despite Fed Rate Cut but Finish Off Session Lows

Gold prices tumbled on Monday dropping more than 1.5%, as the dollar rallied weighing on the yellow metal. Prices finished well off the session lows. Gold has been unable to gain a safe-haven status bid, as the coronavirus weighs on riskier assets. With the exception of US treasury bonds, all capital markets appear to be under pressure, with stock getting hammered despite the Fed cutting interest rates on Sunday by 100-basis points and introducing a new bond purchase program of 700-billion.

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Gold prices dropped sharply on Monday, declining more than 3% following a robust decline on Friday. Prices sliced through many levels of support crashing through the 200-day moving average but rebounding into the close. Resistance is now seen near another upward sloping trend line that comes in near 1,490. Additional resistance is seen near the 10-day moving average at 1,587. Short term momentum is negative as the fast stochastic recently generated a crossover sell signal.

Short term momentum is negative as the fast stochastic accelerated into oversold territory. The current reading on the fast stochastic is 15, below the oversold trigger level of 20, which could foreshadow a correction.

Medium-term momentum is 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 sliced through the zero-index line which reflects accelerating negative momentum. The MACD accelerated to the lowest level seen since September of 2011. This was the last time prices moved above $1,700, and after the decline, there was a swift rebound in price action.