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

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.

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.