Gold Price Prediction – Prices Consolidate Following Brexit
Gold prices moved sideways in the wake of the Brexit vote which as widely expected defeated the Prime Minister Teressa May. The markets had discounted a no vote, which led to some short-covering in the pound. The easing of the dollar helped buoy gold prices.
Technical Analysis
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Gold prices remain range bound and are forming a bull flag pattern which is a pause that refreshes higher. Support is seen near the 20-day moving average at 1,272. Additional support is seen near the 200-day moving average at 1,248. The 20-day moving average recently crossed above the 200-day moving average, which shows that a medium-term up trend is in place. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Momentum, as reflected by the MACD (moving average convergence divergence) index, is also negative as the index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line.
Brexit Tensions Could Generate Volatility
The UK is scheduled to leave the EU in 10 weeks, and there is growing alarm among British and European politicians that Prime Minister Terresa May will fail to end the impasse in time to avoid the potential economic catastrophe of leaving the EU without a deal. Any alternatives, including calling a second referendum, would likely require the EU to extend the March 29 departure deadline. Jeremy Corbin has now called for a no confidence vote which could further plunge the UK in chaos. Prime Minister May lost the vote on approving her Brexit deal by 432 to 202. Giving her reaction afterwards, she was barely able to contain her frustration.