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David Becker

Gold prices were nearly unchanged on Wednesday as the Fed’s meeting minutes did little to change the view for gold prices. US yields continued to move lower, which shows that the market is concerned about future growth especially if a trade deal is not reached. There are rumblings that Trump is getting restless with the Chinese and the Chinese are stating that the US wants too much.

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Technical Analysis

Gold prices continued trade sideways in a downward sloping trend channel. Volatility has nearly vanished as market complacency has set in. Prices are squeezed between support near the 10-day moving average at 1,465, and the  100-day moving average at 1,480. The 10-day moving average crossed below the 100-day moving average which would show that a short-term downtrend is in place. Short term momentum has turned positive but is beginning to decelerate. The fast stochastic and the signal line are moving together and with a flat trajectory, this points to consolidation.  Medium-term momentum is about to turn positive as the MACD (moving average convergence divergence) index is poised to generate a crossover buy signal. This occurred 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).

 

Fed Minutes Point to a Fed on Hold

The Fed released the minutes of its latest FOMC meeting.  At that meeting, the Fed kept rates steady after cutting the previous three meetings.  Powell has stressed that it would hurdle rate to trigger any change in policy.  The Fed basically said that the would-be on hold for a while and essentially are at neutral policy.  WIRP suggesting only a 5% chance of a cut. The 10-year yield has declined by 20-basis points in the last couple of weeks, which could be telling the markets that weak growth is on the way.

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