Gold Price Prediction – Gold Rebounds Following Powell Speech

Gold prices rebounded on Friday as the dollar eased, and US yields declined.  Commentary from the central bank symposium in Jackson Hole Wyoming, provided traders with a dovish bent, that reduced the chance of a Fed rate hike in December.  Fed fund futures eased reducing the chances of a Fed hike from 70% to 50%, while the September Fed fund futures is still showing nearly 100% chance that the Fed would increase rates.

Technical Analysis

Gold prices surged higher retesting resistance which was former support near the July 2017 lows at 1,205.  Prices generated an inside day with a higher low and a lower high which is a sign of indecision. Target resistance is seen near the 10-day moving average at 1,228. Support is seen near the August lows at 1,160. Positive momentum is accelerating. The fast stochastic generated a crossover buy signal in oversold territory. The current reading on the fast stochastic is 17, which is below the oversold trigger level of 20 and could foreshadow a correction. Negative momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in the red with a flat trajectory which points to consolidation.

Fed Chair Powell Made His First Speech Since Trump Criticism

On Friday Fed Chair Powell gave his first speech since President Trump commented on Fed policy. He defended the Fed path which was gradual and focused on inflation as well as growth.  Trump told a group of investors during July that he would be disappointed if the Fed continued to raise interest rates.

The Fed’s Bullard in an interview on CNBC Friday continued to discuss his dovish stance saying that he did not believe that the Fed will tighten again in 2018.  He believes that GDP in 2018 will be robust but does not see inflation increasing at a rate that would push the Fed to be preemptive.