Gold Price Prediction – Prices Drop as the Dollar Rebounds

Gold prices moved lower as the dollar rebounded and US yields moved sideways. The rally in the greenback came as the dollar was oversold having declined more than 10% since hitting a high in March. The Fed meeting minutes from their July meeting showed that Fed officials are concerned that the spread of the coronavirus could continue to weigh on economic growth.

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Technical analysis

Gold prices dropped nearly 3% eliminating the week gains in one day following two consecutive days of more than 1% upside. Prices sliced through short term support near the 10-day moving average at 1,978, which is now seen as resistance. Target support is seen near the 50-day moving average at 1,855, but appears to be about to generate a crossover sell signal. Medium-term momentum remains negative as the MACD histogram is printing in the red with a sliding trajectory which points to lower prices.

Fed Minutes Show Concern

The Federal Open Market Committee expressed concern at their last meeting over the future of the economy. If the virus remains out of control, the economic output could contract. Officials at the meeting agreed that the ongoing public health crisis would weigh heavily on economic activity, employment, and inflation. Comments indicated that while members are in favor of adding clarity to their expectations for when they will hike rates again, they appeared to reject the likelihood of using bond purchases to control yields on government bonds.