Gold prices initially moved lower on Friday, following news that UK PM May, said she would support a second referendum on Brexit if Labour would agree to her withdrawal plan. This 4th vote will likely be rejected leaving the UK without leadership. Gold was also under pressure as the dollar continued to gain traction, with the DXY pushing up against resistance levels.
Gold prices held support levels, near an upward sloping trend line that comes in near 1,273. A break of this key support level could lead to a test of the December lows at 1,237. Resistance is seen near the 10-day moving average at 1,285, and then the 50-day moving average at 1,290. Short term momentum remains negative as the fast stochastic continues to accelerate lower. The current reading of 27, is on the lower end of the neutral range but above the oversold trigger level of 20.
Meditum term momentum 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.
United Kingdom PM May is on the Ropes
UK Prime Minister Theresa May has announced that she was offering a second referendum to get her withdrawal plan across the line. PM May used a speech in London to outline what she claimed was a new Brexit deal which in reality looked a lot like her old Brexit deal. May is fighting an uphill battle as she does not have enough votes for a withdrawal bill, and a second referendum would likely leave her out of power.
This article was originally posted on FX Empire
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