Gold Price Prediction – Prices Slip Following Fed Minutes

Gold prices moved lower after testing higher levels, in the wake of the Federal Reserve minutes that showed that the move in July was more of a tweak than a trend. President Trump reversed his prior statement that he was evaluating a tax cut, and instead continued to focus on the Federal Reserve. The President wants the Fed to cut rates by 1%, despite better than expected financial results from both Walmart and Target which showed that consumer spending is very strong.

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Technical Analysis

Gold prices attempted to move higher but met resistance as US yields moved higher and the dollar gained traction. Prices are retesting a 6-year high. Prices tested resistance is seen the 10-day moving average at 1,506 and eased back to close near 1,501. Short term momentum remains negative as the fast stochastic recently generated a crossover sell signal but it has moved out of the overbought territory and continues to have a downward trajectory. 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 downward sloping trajectory which points to lower prices.

The Fed Minutes Shows a Recalibration

The Fed minutes showed that bank governors saw their move to cut interest rates last month as a “recalibration” rather than the start of a more aggressive easing cycle. The minutes of the July 30-31 meeting, released on Wednesday, also showed officials believed were uncertain about the Trump administration’s trade policy and showed concern that the issues were not likely to let up anytime soon, creating a headwind for the US economic outlook. As a result, Fed officials didn’t spell out in much detail how they might act to lower rates in the months ahead but stressed the need to be flexible.