Gold Prices Dip as Fed Keeps Rates Unchanged

Gold prices moved lower as the dollar gained traction, as the 10-year US yield hit fresh highs. This followed the Federal Reserve meeting where the FOMC kept rates unchanged. As yields moved higher the dollar began to soar, paving the way for lower gold prices. Riskier assets moved higher on Wednesday but retraced on Thursday taking the bids out of the yellow metal.

Technical Analysis

Gold prices eased lower on Thursday on the heels of the FOMC meeting. Prices slipped through support, which his now resistance near the 20-day moving average at 1,226.  Support is seen near the 50-day moving average at 1,209. 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 Kept Rates Unchanged

The Federal Reserve kept rates unchanged and altered some of their wording. While they acknoleged that economic activity was strong they also said that business investment was dipping. Here is their commentary. “Information received since the Federal Open Market Committee met in September indicates that the labor market has continued to strengthen, and that economic activity has been rising at a strong rate. Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low. Household spending has continued to grow strongly, while growth of business fixed investment have grown has moderated from its rapid pace earlier in the year. On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. Indicators of longer-term inflation expectations are little changed, on balance.”