Gold Price Prediction – Gold Test Resistance Ahead of Fed

Gold prices are testing resistance levels ahead of the Fed meeting on Wednesday. While the market widely expects the Fed to raise rate by 25-basis points, it also does not see multiple rate hikes moving forward in 2019.  The 2-year yield tumbled on Tuesday by 5-basis points printing at 2.65%, which is the lowest its been since September. With the Fed moving rates to a range of 2.25 to 2.50, the markets barely have any rate hikes, and believe the Fed will begin to cut rates in 2020. US housing starts came in higher than expected but that failed to buoy yields.

Technical Analysis

Gold prices moved higher on Tuesday and are testing resistance near the November highs at 1,250. Support on the yellow metal is seen near the 20-day moving average at 1,233. Additional support is seen near the 50-day moving average at 1,226. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The fast stochastic is printing a reading of 84, which is above the overbought trigger level of 80 which could foreshadow a correction. The MACD histogram is printing in the black with a rising trajectory which points to higher prices.

Housing Starts Rise More than Expected, Building Permits Surge Higher

Housing starts increased by 3.2% to adjusted annual rate of 1.256 million units last month, according to the Commerce Department. The rebound was driven by a robust rise in multi-family homes while single family homes dropped to a 18-month low. Housing starts for October was revised down to show starts dropping to a rate of 1.217 million units instead of the previously reported pace of 1.228 million units.

Building permits increased 5.0% to a rate of 1.328 million units in November, driven by a surge in volatile multi-family housing sector. Economists forecast housing starts slipping to a pace of 1.225 million units last month.