Gold Price Prediction – Prices Rise Following the Fed Minutes

Gold prices moved higher on Wednesday as the dollar edged higher and U.S. Yields continued to move lower. The decline in the U.S. 10-year yield eased slightly following the Federal Reserves’ meeting minutes that show the Fed is waiting for more signs of growth. There is some interest in reducing bond purchase of MBS first, given the robust level of U.S. Housing prices.

Technical analysis

Gold prices moved higher and continued to rebound. Support is seen near the 10-day moving average near 1,782 and then an upward sloping trend line near $1,762.  Resistance is seen near the 50-day moving average at 1,834.   Short-term momentum has turned 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 MACD signal line (the 9-day moving average of the MACD line).

The Fed Minutes Show Economic Progress

Federal Reserve officials last month felt that substantial further progress on the economic recovery was generally seen as not having yet been met. At its June 15-16 meeting, the Federal Open Market Committee said that participants expected progress to continue. The Fed minutes indicate that the economy has made progress but not substantial enough yet to trigger a taper of the Fed’s bond purchase program. Some question about slowing MBS purchases faster than Treasuries given elevated home prices.