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Gold Price Prediction – Prices Consolidate and Remain Range bound; Geopolitical Risks Remain

The risks are for more geopolitics which could buoy gold
David Becker
Comex Gold

Gold prices moved sideways as the fallout from the Feds FOMC meeting, was minor. The Fed gave a hawkish cut of interest rates pushing the Fed fund rate down to a range between 1.75%-2.0%. The markets are still pricing in an additional 25-basis point cut in 2019, despite 3-dissents on the FOMC decision. The Fed cut mainly because global economic conditions are weak, and uncertain continues to weigh on growth given the continued US-Chinese trade war. US home sales rose to a 1.5-year high, but that failed to increase US yields.

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Technical Analysis

Gold prices edged higher rebounding ahead of support near the 50-day moving average at 1,481, and recapturing the 10-day moving average at 1,496. Additional support on the yellow metal is seen near the 50-day moving average at 1,481. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal in oversold territory. The movements of the fast stochastic represent a flag pattern which is a pause that could refresh. Currently the fast stochastic is printing a reading of 21, which is slightly above the oversold trigger level of 20. Medium-term momentum is negative to neutral as the MACD histogram is printing in the red with a flat trajectory which points to consolidation.

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US Home Sales Rose More than Expected

The National Association of Realtors reported that US home sales unexpectedly rose to a 17-month high in August as lower mortgage rates buoyed demand. Existing home sales increased 1.3% to an annual rate of 5.49 million units last month. July’s sales pace was unchanged at 5.42 million units. Expectations were for existing home sales to decline by 0.4% to 5.37 million units. Existing home sales make up about 90 percent of US home sales.

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