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Gold Price Prediction – Gold is Breaking Out and Headed for 2018 Highs

Gold prices are breaking out and attempting to push through resistance levels as US growth continued to ease on Friday. The softer than expected Industrial Production report weighed on US yields which capped the rise in the dollar, paving the way for higher gold prices.  Stimulus from China and reports that the Chinese and US authorities were making progress on trade talks helped riskier assets gain traction.

Technical Analysis

Gold prices moved higher on Friday in quiet trade as the US markets were closed for the President’s Day holiday. The weak liquidity gave traders that were active an opportunity to push gold prices through resistance levels. Trend line resistance that connects the highs from April of 2018 to the highs in January 2019, comes in near 1,324. The 2019 highs are seen near 1,326, and a break of that level (A close) would lead to a test of the 2018 highs at 1,365. Short term support is seen near the 5-day moving average 1,315, and then the 20-day moving average at 1,308.  Short term momentum has turned positive as the fast stochastic recently generated a crossover buy signal in the middle of the neutral range. Medium Term momentum is turning positive as the MACD (moving average convergence divergence) index is generating a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line.

US Growth Has Likely Eased

The softer than expected retail sales and industrial production data released late last week shows that the US growth outlook for Q4 just got a whole lot worse.  The Atlanta Fed’s GDPNow model is now tracking 1.5% SAAR growth versus 2.7% before the release of those two reports.  The New York Fed’s Nowcast model is now tracking 2.2% for Q4 versus 2.4% previously.  More surprising is that Q1 has been cut to 1.1% from 2.2% previously.

This article was originally posted on FX Empire

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