Gold Price Prediction – Prices Tumble Through Support Following Clarida Speech

Gold prices moved lower on Tuesday edging slightly below support near the 50-day moving average at 1,214.  Prices where under pressure as the dollar gained traction again the Euro. As the dollar gained ground it generated headwinds for the yellow metal.  Fed Vice Chair Richard Clarida in a speech to bankers in New York said that the Fed would be data dependent moving forward. The lack of concern about current market volatility put upward pressure on the greenback.

Technical Analysis

Gold prices tumbled on Tuesday pushing through medium term support near the 50-day moving average at 1,214. Target support on the yellow metal is now seen near and upward sloping trend line that connects the lows in August to the lows in October and comes in near 1,203. 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).

Fed Could Be Close to Neutral

Federal Reserve Vice Chairman Richard Clarida expressed a cautious view Tuesday about how the central bank should proceed in raising interest rates. He said in a speech delivered to bankers in New York, emphasized the importance of policymakers being data dependent. His speech did not mention the current volatility. Instead, he gave a mostly glowing view of the economy and said he expects strong growth with moderate inflation to continue.

Home Prices Sink

Home price gains shrink to the lowest level since January 2017, according to the September S&P Case-Shiller index. Home values are still rising, but the gains have now shrunk to the lowest level since January of 2017, as rising mortgage rates cut into affordability. Prices increased 5.5% annually in September, down from 5.7% in August, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index.