Gold Price Prediction – Gold Trades Sideways, but Momentum is Negative

Gold prices were nearly unchanged on Wednesday forming a doji day which his a sign of indecision. Prices were also steady following the Fed Meeting minutes which were relatively dovish showing that there were no rate moves expected for the foreseeable period. The Fed remains committed to being patient and will remain steady until inflation begins to perk up or growth begins to decline.

Technical Analysis

Gold prices traded sideways, holding in just above support near an upward sloping trend line that comes in near 1,270. A break below this level would lead to a test of the May lows at 1,266. A close below the May low could lead to a downdraft and a test of the December 2018 lows at 1,233. Resistance is seen near the 10-day moving average at 1,285, and then the 50-day moving average at 1,290. Medium term momentum has turned negative as the MACD (moving average converence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices. The fast stochastic continues to move lower reflecting accelerating short term negative momentum. The current reading on the fast stochastic is 22, just above the oversold trigger level of 20.

The Fed Says Rate Moves Will Wait

The Federal Reserve meeting minutes for May 1^st and 2^nd were released on Wednesday. The Fed remains committed to begin patient with policy, saying that interest rates will remain unchanged for the foreseeable future. Then minutes also showed that members raised their expectations for full-year economic growth. Despite their general optimism, the committee held the line on interest rates, primarily citing a lack of inflation pressures.