Gold Price Prediction for March 20, 2018

Gold prices rebounded on Monday but were unable to recapture resistance which was former support near an upwards sloping trend line at 1,318.  Trader’s are now eyeing the Federal Reserve meeting which is schedule for Tuesday and Wednesday this week. Additional resistance is seen near the 10-day moving average at 1,323.  Support is seen near the February lows at 1,302. Momentum has turned positive as the fast stochastic generated a crossover buy signal. The MACD on the other hand is printing near the zero-index level with a flat trajectory which reflects consolidation.

All Eyes are on the FOMC Meeting

U.S. markets will focus on the FOMC meeting, which is Chairman Powell’s debut. There shouldn’t be any surprise with respect to the rate decision. A 25 basis points tightening in the funds rate band to 1.50% to 1.75% is as sure a bet as there can be. But there’s considerable uncertainty over the trajectory of rate hikes and whether the FOMC will opt to maintain the outlook for 3 tightening this year, or revise up to 4. Data is on the thin side and includes housing figures and manufacturing numbers. Meanwhile, the potential for another government shutdown looms on Friday as the House and Senate debate a spending bill. Although much of the work was accomplished with the passage of the Bipartisan Budget Act of 2018, the recent dust up over tariffs, along with gun control and DACA issues, may complicate negotiations.

Rate guidance shows that the median dot plot to remain at 3 for this year, although many analysts have raised their estimates to 4 tightening this year. It would not surprise if some Committee members boost their forecasts, which would widen the range from the high side, but it would take four policymakers to shift their estimates higher to increase the median to 4, and we doubt that will be the case. The tempering in most of the recent inflation data and indications that neither the economy, nor the labor markets, are nearing full capacity will support the doves’ arguments, while giving others pause.