Gold Price Prediction – Prices Slide Ahead of Fed Decision

Gold prices moved lower on Tuesday, ahead of the Fed’s two-day monetary policy meeting which ends on Wednesday. Expectations are for the Fed to reduce their overnight lending rate by 25 basis points. Lower than expected inflation in Japan also weighed on gold prices.

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Technical Analysis

Gold prices moved lower but remain rangebound and are headed toward support near an upward sloping trend line at 1,483. Additional support is seen near the 100-day moving average at 1,464. Resistance is seen near the 10-day moving average at 1,491. The next level of target resistance is seen near the October highs at 1,519.

Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The fast stochastic is printing in the middle of the neutral range. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the red with a declining trajectory that points to lower prices.

Fed Begins 2-Day Meeting

The Fed starts its two-day meeting on Tuesday.  The decision comes out tomorrow at 2 PM ET on Wednesday, followed by Powell’s press conference at 230 PM ET.  Another 25 bp cut is widely expected. The Fed is likely to point to constructive negotiations with trade but also say that the global growth environment is concerning. Lower than anticipated Japanese CPI was reported.  Headline inflation was seen rising 0.8% year over year but instead remained steady at 0.4%.  Ex-fresh food was also seen rising 0.7% year over year but it too remained steady at 0.5%.