Gold Price Prediction – Prices Whipsaw and Settle Lower Despite Dovish Fed Annoucement

Gold prices whipsawed following commentary from the fed as the dollar gain traction, gyrating the yellow metal. The dollar whipsawed as the US 10-year yield despite comments from the Federal Reserve that rates would remain lower for longer. Prices continue to trade sideways in a relatively tight range. US jobless claims climbed more than expected.

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Technical analysis

Gold prices initially moved higher as the dollar moved lower but then reversed and ended the session in the red. Resistance is seen near the 10-day moving average at 1,948. Target support is seen near the 50-day moving average at 1,880. Medium-term momentum remains negative as the MACD histogram is printing in the red with a sliding trajectory which points to lower prices. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The relative strength index has also turned higher reflecting decelerating negative momentum.

Fed Says Rates Will Remain Low

Federal Reserve Chair Jerome Powell announced a major policy shift were the central bank will allow inflation to run hotter than normal to support the labor market and broader economy. The announcement came at the virtual Jackson Hole symposium. The move was called a robust updating of the Fed policy. The goal of the Fed is to drive core inflation to 2%. This would mean that the Fed would allow inflation to run slightly hotter than normal without putting the brakes on. The changes were codified in a policy blueprint called the “Statement on Longer-Run Goals and Monetary Policy Strategy,” first adopted in 2012.