Gold Price Prediction – Prices Edge Higher Following Fed Decision

Gold prices edged higher on Wednesday following the Fed’s decision to keep interest rates unchanged. The Fed said that job gains have been solid, but inflation remains below the Fed’s 2% objective. The Fed said that household spending is rising at a moderate rate. The Fed will continue to assess the appropriate path of the fund’s rate according to the Fed’s statement. Business investment and exports remain weak according to the Fed, which is why the market is leaning to future rate cuts instead of tightening. US Pending Home sales dropped more than expected in December.

 

 

 

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Technical Analysis

Gold prices moved higher hold just above short-term support near the 20-day moving averaged at 1,559. Price action remains in a cup and saucer continuation pattern. This is generally a pause that refreshes higher. Medium-term momentum is negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the-red with a downward sloping trajectory which is points to lower prices.

The movement of the relative strength index (RSI) reflects consolidation as the oscillator moves sideways. Short term momentum is positive as the fast stochastic generated a crossover buy signal and continues to accelerate higher.

Pending Home Sales Rise

Pending home sales dropped 4.9% in December compared with November. Sales were projected to rise 1% month to month. December is historically the slowest month of the year. Despite the month-to-month drop, though, 2019 ended up slightly stronger than the year before. Pending home sales were 4.6% higher last month than in December 2018, according to the National Association of Realtors. Regionally, pending sales in the Northeast fell 4% for the month and were 0.1% lower than a year ago.