Yahoo Finance Gold Price Prediction – Gold Rebounds But Still Trades Sideways
Gold prices moved higher but continue to trade sideways, as the dollar was also consolidating and losing ground to the Euro. While interest rates differentials continue to point to a stronger dollar the recent inflation data points to decelerating US inflation expectations. Gold in general moves in the opposite direction from the dollar as the yellow metal is priced in dollars and becomes more expensive as the dollar gains ground. The trade spat between the US and China is continuing to accelerate as the White House announced another potential round of tariffs. Trump believe, as he stated in today’s tweet, that he has the Chinese on the ropes and the best way for him to be able to get a fair deal is to squeeze the Chinese while their markets are under pressure.
Technical Analysis
Gold prices moved sideways on Monday gaining a little bit of ground, as markets continued to focus on the trade spat between the US and China. Prices were unable to recapture short-term support near the 20-day moving average near 1,324. Additional resistance is seen near the 50-day moving average at 1,327. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The MACD (moving average convergence divergence) histogram is printing in the black with a declining trajectory which points to consolidation.
The Differential Favors the Greenback
Despite a softer than expected CPI, PPI and import price index during last week, the yield differential between the US and Germany continues to move in favor of the greenback. The 2-year yield differential has climbed to 360 basis points which is the highest level seen since 1990. The US 2-year has also climbed to a 28-year high versus the Yen, but continues to face headwinds against the Japanese currency. The dollar is also heavy against the pound, despite a yield differential that moved up 90-basis points so far in 2018.
This article was originally posted on FX Empire
