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David Becker

Gold prices whipsawed as traders took profits on their short dollar positions. US yields also whipsawed as riskier assets surged in value. The dovish FOMC meeting was finally incorporated into sentiment. The Fed delivered a dovish hold of monetary policy and reduced its growth forecasts for 2019 and 2020. In addition, the average eliminated the number of rate hikes declined from 2 in December to zero in March 2019. The Fed does see a 1-rate hike in 2020. Lastly, the Fed gave some guidelines to the balance sheet.

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Technical Analysis

Gold prices whipsawed hitting a higher high, but reversing at the beginning of the North American Trading session. Prices rebounded at the 50-day moving average at 1,303. Additional support is the 10-day moving average at 1,301. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices and accelerating positive momentum. The fast stochastic has an upward sloping trajectory which points to accelerating positive momentum. The current reading of 71, is on the upper end of the neutral range but below the overbough trigger level of 80.


The Fed Will Stop Rolling off Its Balance Sheet

The FOMC announced that it will decelerate the reduction in its portfolio dropping to 15-billion at the beginning in May, and dwindling down to nothing in September. The Fed announced that it will continue to allow its agency holdings to decline by up to a maximum of $20 billion per month.

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