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Gold Price Prediction – Gold Accelerates Higher Form Bull Flag Pattern

By:
David Becker
Published: Dec 17, 2018, 19:02 UTC

The dollar eased as yields moved lower ahead of the Fed’s monetary policy decision which is scheduled for this Wednesday. The Euro gain traction despite

Gold daily chart, December 17, 2018

The dollar eased as yields moved lower ahead of the Fed’s monetary policy decision which is scheduled for this Wednesday. The Euro gain traction despite weaker  than expected EU CPI and last weeks soft EU PMI data. The Fed is widely expected to raise rates by 25-basis points, and investors are more interested in what Fed Chair Powell says about future hikes in 2019.

Technical Analysis

Gold prices moved higher on Monday, forming a bull flag pattern which is a pause that refreshes higher. Resistance is seen near the November highs at 1,249. Support on the yellow metal is seen near the 20-day moving average at 1,232. Additional support is seen near the 50-day moving average at 1,225. Short-term momentum is turning positive as the fast stochastic generates a crossover buy signal. The current reading on the fast stochastic is seen near 77, which is below the overbought trigger level of 80.

The Federal Reserve is scheduled to determine interest rates at their policy meeting for December on Wednesday and the Fed is expected to raise interest rates by 25-basis points to a new range between 2.25% and 2.50%. Rates have declined especially the long end of the interest rate curve as the market believes the Fed will be relatively dovish when it discusses future rate hikes. Going forward every meeting the Fed has next year will be followed by a Press Conference.

EU CPI was Weaker than Expected

The Eurozone reported its final CPI for November at 1.9% year over year versus expectations of 2% which also was the previous reading. The core inflation rate which excludes food and energy was unchanged at 1% which was in line with expectations.  Last week, the EU reported very unimpressive December PMI readings. In France the composite fell below 50, which means the country is now contracting in manufacturing and services. This week France reports GDP and consumer spending data which will be closely watched.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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