Gold Price Prediction – Prices Rise Following ECB Decision as Momentum Turns Positive

Gold prices moved higher on Thursday despite a drop in the Euro, as the ECB kept interest rates unchanged in Mario Draghi’s swan song. This will be his last ECB meeting, as Christine Lagarde will take over at the end of the month. The ECB is totally in dovish mode and poised to further attempt to stimulate the European economy.

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Technical Analysis

Gold prices moved higher testing resistance near a downward sloping trend line that comes in near  trend line that comes in near 1,505. The next level of target resistance is seen near the October highs at 1,519. Support is seen near the 10-day moving average at 1,489. Additional support is seen near the 100-day moving average at 1,460. Short term momentum has turned positive but recently has been whipsawing. The fast stochastic is printing in the middle of the neutral range. Medium-term momentum has 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 is printing in the black with a rising trajectory that points to higher prices.

The ECB Left Rates Unchanged

The European Central Bank left short term interest rates unchanged. This marked President Mario Draghi’s last monetary policy meeting at the ECB. The central bank also kept its forward guidance unchanged, suggesting that its main interest rates will remain at their current or lower levels until there’s strong evidence of a pick up in prices. Separately, the initial eurozone October PMI readings were reported before the ECB decision.  Composite PMI rose to 50.2 versus 50.3 expected and 50.1 in September, with manufacturing steady at 45.7 and services up to 51.8.  Of note, German composite rose a tick to 48.6.  French composite jumped to 52.6 from 50.8 in September.