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David Becker

Gold prices moved higher as the dollar moved lower following the Fed’s decision to keep interest rates unchanged. The Fed will target above 2% inflation and will do everything in its power to increase inflation expectations. The US retail sales came in softer than expected which weighed on US yields and helped undermine the US dollar paving the way for higher gold prices.

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Technical analysis

Gold prices edged higher pushing higher through former resistance near a downward sloping trend line resistance seen near 1,945. Short term support is seen near the 10-day moving average near 1,945. Additional support is seen near the 50-day moving average at 1,929. Target resistance is seen near the September highs at 1,979. 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 MACD signal line (the 9-day moving average of the MACD line). Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The relative strength index is moving sideways to higher which is a sign of accelerating positive momentum.

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The Fed Keeps Rates at Zero and Signals Long Term Low Rates

Federal Reserve kept interest rates unchanged and sees rates at zero through 2023. In new projections, all 17 officials said they expect to keep rates near zero at least through next year, and 13 projected rates would stay there through 2023. The Fed said it would maintain rates near zero until labor market conditions have reached levels consistent with the committee’s assessments of maximum employment and inflation has risen to 2%.

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