Gold Price Prediction for January 18, 2017

Gold prices moved higher as the dollar dropped, as UK inflation hit a 2.5 year high generating higher inflation expectations which boosted the yellow metal.  Prices are poised to test target resistance near the October 2016 lows at 1,241.  Support is seen near the 10-day moving average at 1,189.  The RSI (relative strength index) hit a fresh 6-month high reflecting accelerating positive momentum, but the current reading is 71, above the overbought trigger level of 70, which could foreshadow a correction.

UK inflation surged to 1.6% year over year in the headline CPI reading for December, the highest rate since July 2014 and up from 1.2% in November. The median forecast had been for a more modest acceleration to 1.4% year over year. The core CPI figure also spiked to 1.6% year over year from 1.2%, and similarly surpassed the median expectation by 0.2 of a percentage point