Gold Price Prediction – Prices are Poised to Test July Highs Following Powell TestimonyYields drop with the dollar paving the way for higher gold prices
Gold prices rallied on Wednesday following Fed Chair Powell’s Testimony in front of the financial oversight committee in the House of Representatives. Powell will follow up Wednesday’s testimony with a second one in front of the Senate on Thursday. Powell all but confirmed that the Fed was planning to cut rates when they meet again in July. He was asked by the Chair Maxine Waters whether he planned to stay his entire term, and stood steadfast that he would remain despite the President pressing the Fed to cut interest rates.
Gold prices surged on Wednesday as the dollar eased and US yields moved lower. Prices recaptured resistance which is now support near the 10-day moving average at 1,406. Resistance is seen near the July highs at 1,438. Short term momentum is neutral as the fast stochastic begins to decelerate. The current reading on the fast stochastic is 55, which is in the middle of the neutral range and reflects consolidation. The RSI is reflecting accelerating positive momentum and forming a cup and handle continuation pattern which would points to accelerating positive momentum.
Powell is Dovish
The prepared testimony to the House Financial Services Committee, showed that Fed Chair Powell believe that business investments has slowed recently as uncertainties over the economic outlook linger. He repeated the word uncertainty dozens of times during his testimony which sets the Fed up for a preemptive strike on inflation and growth with a rate increase in July. Powell said that crosscurrents have reemerged and that some FOMC participants saw that the case for a somewhat more accommodative monetary policy. Powell said that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the economic outlook.