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Gold Price Prediction – Prices Trade Sideways Ahead of Fed

By:
David Becker

  Gold prices continued to trade sideways consolidating in a tight range. Prices have been trading near the 1,200 mark for nearly a month after

Comex Gold

 

Gold prices continued to trade sideways consolidating in a tight range. Prices have been trading near the 1,200 mark for nearly a month after recapturing the 1,200 level on August 24.  The sideways price action of the dollar is creating an uncertain situation. Additionally, the trade spat between the US and China is generating unwanted volatility.  Companies are now pulling back on future investment which is putting downward pressure on riskier assets. Trader’s are looking toward Wednesday’s Federal Reserve meeting which is expected to see an increase in interest rates. Forecasts for inflation and growth are expected to see an uptick.

Technical Analysis

Gold prices continue to consolidate and trade in a tight range. The has pushed the Bollinger band width, which measures historical volatility to the lowest levels since early June. The Bollinger band width measures the difference between the Bollinger band high and the Bollinger band low. Resistance on the yellow metal is seen near the 50-day moving average at 1,224. Short-term support is seen near the 20-day moving average at 1,199. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints in the black with a declining trajectory which points to consolidation. The fast stochastic generated a crossover sell signal which points to decelerating positive momentum.

Companies are Pulling Back on Investment

The trade spat between the US and China is pushing companies to rein in plans on investment. The business roundtable of CEOs found that 66% of the company heads said that recent tariffs and the trade despite would have a negative impact of their capital investment decision of the next 6-months.  33% of the CEOS expect no-impact on capital spending while only 2% believe there will be more spending. The business roundtable also showed that hiring has declined falling 3% from the previous quarter to 92.6%. CEO’s also see sales increasing by 2 points to 132.3.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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