Gold Price Prediction – Prices Rise After BoJ and Ahead of Fed

Gold prices moved higher on Tuesday as the pound continued to drop as fears over Brexit continue to perpetuate. In France investors were disappointed with a 0.2% Q2 GD.  Japan reported disappointing industrial output figures and an unexpected decline in unemployment before the BOJ met and left policy unchanged.  The Fed is on deck and will likely ease rates when it meets on Wednesdaay.

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Technical Analysis

Gold prices edged higher on Tuesday ahead of tbhe Feds monetary policy meetings scheduled for Wednesday. Prices are forming a cup and handle breakout pattern above the = 10-day moving average at 1,425, which is now seen as short term support. Resistance is seen near the July highs at 1,452. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 55, which is in the middle of the neutral range and reflects consolidation. Medium term momentum remains negative, but is turning neutral as the MACD (moving average convergence divergence) histogram is printing in the red with rising trajectory which points to consolidation.

The BOJ Keeps Rates Stable

Japan reported weak industrial production ahead of its BOJ decision that dropped 3.6% in June, which is twice what the median forecast expected. IP dropped 4.1% year over year from 2.1% in May. The unemployment rate edged down to 2.3% and the job-to-applicant ratio slipped.  Despite the weak number the BOJ left rates unchanged. The central bank reduced its GDP forecast for the fiscal year to 0.7% from 0.8%.  The government had cut its forecast in recent days as well.  It stands at 0.9% now down from 1.3%.  The BOJ has all but given up on its inflation target, now forecasting CPI to be at 1.6% at the end of FY21.