Gold Price Predication – Gold Drops as the Dollar Gain Traction

Gold prices gave back some of their recent gains as the dollar gain traction after multiple days of momentum loss.  The Fed minutes showed that the central bank is concerned about its ability to fend off a recession. Inflation is on the rise and the minutes all but signaled a 100% chance that the Fed will raise rates in September.  The question on most traders minds is what are their intentions for the balance of the year.  In addition, Thursday was the first day of the central bank symposium in Jackson Hole Wyoming. The press continue to ask Fed central bankers where they will be swayed by President Trumps comments about his dislike of higher rates

Technical Analysis

Gold prices were under pressure for most of the trading session, falling $15 per ounce. Prices pushed back through support which was former resistance near the 10-day moving average at 1,184. Target Support is seen near the August lows at 1,160.  Positive momentum has decelerated as the MACD (moving average convergence divergence) histogram prints in the black with a declining trajectory which points to consolidation. The fast stochastic is poised to generate a crossover sell signal which would point to accelerating negative momentum.

Capital Continues to Move into the US

US yields were nearly unchanged ahead of Friday’s speech from Fed Chair Powell. He is unlikely to break an news, but he will likely be firm about his intentions to normalize policy and potentially discuss the need for sufficient ammunition to fend off a recession. Meanwhile Trump continues to accuse Europe of currency manipulation, which is helping to moderate any dollar rally. The yield differential between US treasury and bunds moved in the dollars favor on Thursday which paved the way for lower gold prices.  Fed officials are discussing nearly a 3% annualized growth rate in the US where capital is rushing to find a safe haven home.