Gold Price Prediction – Prices Slip Following Fed MinutesTrump has also reversed his view on a tax cut
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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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.