Gold Price Prediction – Prices Slip Ahead of the Fed Meeting

Gold prices eased on Tuesday as the dollar gained traction. The rise in the dollar comes despite a downtick in U.S. Treasury yields. This price action comes ahead of Wednesday’s decision by the Federal Reserve on Interest Rates. Expectations are the Fed will announce the tapering of its bond purchase program.

Technical analysis

Gold prices edged and continued to experience a consolidative tone. Prices were able to recapture resistance at the 10-day moving average at which is now supported at 1,790. Additional support is seen near the October lows at 1,750. Resistance is seen near the October highs at 1,812.  Short-term momentum turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is consolidating as the MACD histogram is printing in positive territory with a sliding trajectory which points to consolidation.

All Eyes on the Fed

The Federal Reserve started its 2-day meeting on Tuesday and will announce its monetary policy on Wednesday. CNBC generated a survey to see when economists believe the Fed will pull the trigger on a rate hike ahead of the decision. Respondents to the survey overwhelmingly forecast that the Fed will announce a decision to reduce its monthly asset purchases in the statement Wednesday and begin tapering in November. The Fed is expected to reduce its $120 billion in monthly purchases of Treasurys and mortgage-backed securities by $15 billion a month, which would bring assets to an end by May.