Gold Prices Prediction – Prices Test Resistance as Momentum Turns Positive

US Durable Goods drop
David Becker

Gold prices moved higher on Monday testing the December highs as the dollar was nearly unchanged in the wake of worse than expected Durable goods orders. US yields ticked slightly higher as riskier assets like stocks continued to hit fresh all-time highs. The Atlanta Fed is now predicting 2.1% growth for te Q4 of 2019, down from the previously expected 2.3%.

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Technical Analysis

Gold prices moved higher testing resistance at the December highs near 1,486. Prices pushed higher testing a downward sloping trend line that comes in at the same level. A close above 1,486, would lead to a test of the November highs at 1,516. Support is seen near the 50-day moving average near 1,477. Additional support is seen near the 10-day moving average at 1,470. Short term momentum is reaccelerating as the fast stochastic generated a crossover buy signal. Medium-term momentum is positive as the MACD histogram prints in the black with an upward sloping trajectory which points to higher prices. The RSI (relative strength index) is accelerating higher pointing to accelerating positive momentum.

GDP Could be Decelerating

The Atlanta Fed’s GDPNow model now estimates Q4 GDP growth at 2.1% down from 2.3% previously.  This compares to the NY Fed’s Nowcast model now has Q4 growth at 1.3, up from 0.69% previously.  It also raised its estimate for Q1 growth to 1.64% SAAR from 0.82% previously.  The Atlanta Fed is likely overstating growth a bit and the NY Fed understating it. Some of the declines in the Atlanta Fed was reflected on Monday following a weaker than expected US Durable Goods Orders. Orders for durable goods sank 2% in November, which was the biggest decline since May.

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