Gold prices formed a doji day, nearly unchanged despite a surge in the Euro versus the US dollar. The dollar continued to weaken as US short-term yields moved lower, ahead of a holiday-shortened week. Gold prices have rallied into the end of the week, as hedge funds continue to purchase gold.
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Gold prices consolidated on Friday forming a doji day which is where the open and the close are at the same level. This is a sign of indecision. Prices are poised to test the November highs at 1,516. Support is seen near the 10-day moving average near 1,488. Additional support is seen near the 50-day moving average at 1,477. The 10-day moving average crossed above the 50-day moving average which shows that a short term up trend is now in place. Short term momentum continues to accelerate higher as the fast stochastic recently generated a crossover buy signal. The only caveat is that the fast stochastic is printing a reading of 96, well above the overbought trigger level of 80, which could foreshadow a correction.
The RSI (relative strength index) is now printing a reading of 71, which is above the overbought trigger level of 70, and also points to a potential future correction. Medium-term momentum is positive as the MACD histogram prints in the black with an upward sloping trajectory which points to higher prices. MACD line generated a crossover buy signal at the beginning of December and continues to reflect positive momentum.
This article was originally posted on FX Empire
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