Gold Price Prediction – Prices Rise to Test Key Resistance Following Powell Speech
The gold price rose on Friday following Fed Chair Powells speech at Jackson Hole. The dollar moved lower as U.S. Treasury yields declined, as consumer sentiment eased, and inflation expectations dropped. Powell signaled to the markets that the Fed is likely to initiate the tapering of its bond purchase program sometime in 2021. It also appears that the Fed Chair wants inflation so he will be able to eventually raise rates when inflation and growth are accelerating at a greater pace.
Gold prices moved higher on Friday and closed up 1.7% for the week. Resistance is seen near the 200-day moving average at 1,811. Support is seen near the 10-day moving average near 1,792. Resistance on the yellow metal is seen near the Prices are overbought as the fast stochastic is printing a reading of 99, above the overbought trigger level of 80 which could foreshadow a correction. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This buy signal 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).
Consumer Sentiment remains Subdued
U.S. consumer sentiment was little changed in the second half of August. The final reading of the index of consumer sentiment compiled by the University of Michigan was 70.3 in August, virtually up from the mid-month flash estimate of 70.2 but down sharply from July’s 81.2. Expectations were for the consumer sentiment index to come in at 71.0. In August, the drop in consumer sentiment left the index at a 10-year low, well below the 101.0 level registered before the pandemic in February 2020.