Gold Price Prediction – Gold Breaks Down and Prices Should Test Lower Levels
Gold prices took it on the chin on Monday, moving lower as concern about Turkey’s currency crisis is buoying the dollar and weighing on gold. The Yuan, the Chinese currency continues to also decline which appears to be correlated to the decline in gold. The dollar has turned into the safe haven, as higher yields are buoy the attractiveness of the greenback. Turkey refuses to increase interest rates, just as Argentina increased their rates Monday to 45% from 40% to defend the Argentinian Peso.
Technicals
Gold prices crashed through support which is now resistance near 1,204, which coincides with the August lows and the July 2017 lows. The next level of target support is seen near the January 2017 lows at 1,180. A break of that level would lead to a test of the December 2016 lows at 1,120. Momentum on gold prices 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. The fast stochastic also generated a crossover sell signal. This also reflects accelerating negative momentum. The proximity to oversold territory show that prices appear to be quickly moving toward an oversold buy signal.
Economic data released this week will show that spotlight on U.S. retail sales. The result will be quickly incorporated into the GDP now model which currently predicts Q3 GDP near 4.3%. Inflation is ticking up as reflected by last weeks core CPI report in the US which showed a 10-year high in core inflation. The Fed will remain on track and increase rates in September which will allow trader’s to focus on the December meeting.
This article was originally posted on FX Empire
