Gold Price Prediction – Gold Trades Sideways Ahead of Central Bank Decisions

Gold consolidates ahead of Fed
David Becker
Comex Gold

Gold prices edged lower on Monday, as markets a decision from the Federal Reserve later this week. Both the Bank of England and the Bank of Japan are scheduled to make monetary policy decisions. While the Fed is expected to keep rates unchanged there is a small chance that the Fed will cut rates. Most believe the Fed will remove the patience language in their statement, setting the stage for lower rates when they meet in July. The current Fed funds futures predict a 20% change of the Fed lower rates when they meet this week.

Technical Analysis

Gold prices edged lower and continue to trade sideways ahead of the Federal Reserve meeting this week. Support is seen near the 10-day moving average near 1,333. Resistance is seen near the June highs at 1,358. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The fast stochastic is printing a reading of 82, above the overbought trigger level of 80, which could foreshadow a correction. The RSI (relative strength index) has reversed lower coming from an overbought territory which also reflects accelerating negative momentum. Medium term positive momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Gold Consolidates Ahead of Fed

Gold prices moved sideways ahead of a busy week that includes monetary policy decision from the Federal Reserve, Bank of England and Bank of Japan. Investors await a decision on whether their will be a meeting between President Xi and President Trump at the G20 meeting which is scheduled for later in June. US yields are also slightly higher, but the dollar continued to consolidate its recent gains generating some headwinds for gold prices. Since gold is priced in US dollars, a stronger dollar makes it more difficult for gold prices to rise.

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