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David Becker
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Gold prices moved higher as the dollar declined and treasury yields remained steady. The move came following the US Federal Reserve’s announcement that rates would remain unchanged to at least the end of 2022. Several Fed members now see rates moving higher in 2023. Inflation is expected to run slightly hotter than normal, while GDP is expected to increase.

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Technical analysis

Gold prices moved higher in the wake of the Fed meeting bouncing from the 10-day moving average at 1,718. Target resistance is now seen near the 50-day moving average at 1,800. Additional support is seen near the June lows at 1,670.   Short-term momentum is positive as the fast stochastic generated a crossover buy signal.  Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the 9-day moving average of the MACD line. The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

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The Fed Keeps Rates on Hold

The Federal Reserve increased its expectations for economic growth. Still, it indicated no expected interest rate hikes through 2023 despite an improving outlook and a turn this year to higher inflation. The Federal Open Market Committee also voted to keep short-term borrowing rates steady near zero, while continuing an asset purchase program of at least $120 billion of bonds a month. Gross domestic product is expected to increase 6.5% in 2021. Expectations for core inflation moved higher, with the committee now looking for a 2.2% gain this year as measured by personal consumption expenditures.

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