Gold Price Prediction – All Eyes are on the Fed

The price action in gold prices is like a broken record as bulls and bears are having a difficult time pushing prices out of their current range. The yellow metal continued to trade sideways consolidating as the daily price chances continue to become narrower ahead of the Fed decision. Prices have been trading near the 1,200 mark for nearly a month.  The sideways price action of the dollar is creating an uncertain situation. Additionally, the trade spat between the US and China is generating unwanted volatility.  The softer than expected acceleration in US home prices also weighed on the US dollar despite a rise in interest rates.

Technical Analysis

Gold prices continue to consolidate and trade in a tight range. The has pushed the Bollinger band width, which measures historical volatility to the lowest levels since early June. The Bollinger band width measures the difference between the Bollinger band high and the Bollinger band low. Resistance on the yellow metal is seen near the 50-day moving average at 1,204. Short-term support is seen near the 20-day moving average at 1,199. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints in the black with a declining trajectory which points to consolidation. The fast stochastic generated a crossover sell signal which points to decelerating positive momentum.

Home Prices are Decelerating

According to the Case Shiller home prices index prices are still rising, but the pace of the gains continues to slow. Home prices rose 6% year over year in July, down from the 6.2% percent gain in June. The 20-city index rose 5.9% year over year, down from 6.4% in June. The 10-city index rose 5.5% year over year down from 6.0% in the previous month. Home prices remain elevated but should be capped by rising bond yields which will make it more expensive to purchase homes.