Gold weekly chart, May 06, 2019

Gold Price Prediction – Gold Rallies on Safe Haven Bid

Gold prices continue to rise on Tuesday as it has become clear that China and the US are at odds over trade. The US claims that China has back tracked on several of the agreed upon issue related to intellectual property. China disagrees and says they never were planning on agreeing to many of these matters. What many believe is that China initially agreed to intellectual property monitoring and penalties and receive critism within the country. Riskier asset continue to come under pressure which has buoyed safe haven assets such as gold.

Technical Analysis

Gold prices rose for a 3rd consecutive trading session. Prices tested the highs seen in April at 1,288. Additional resistance is seen near the 50-day moving average at 1,293. Suport on the yellow metal is seen near the 10-day moving average at 1,279. Short term momentum is positive as the fast stochastic generated a crossover buy signal. Medium term momentum has also turned positive as the MACD (moving average convergence divergence) index generated 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). The MACD histogram also generated a buy signal. The trajectory is moving higher which reflects accelerating positive momentum.

The Trade Deal is Generating Volatility

The trade dispute between the US and China is driving gold prices higher. The US accused China of backtracking on several items that had already been negotiated as part of the trade deal. US Trade representative Bob Lighthizer confirmed that tariffs on Chinese goods will be raised on Friday.  This will see an increase on 200-billion of goods and services. He also confirmed that a Chinese delegation will be in Washington Thursday and Friday.  It appears that the trigger for tariffs was the draft agreement that China sent to the US over the weekend.