Gold Price Prediction for March 9, 2018
Gold prices rebounded from session lows, nearly forming a doji day after trading in a tight range for most of the session. The stronger dollar which came following the ECB’s monetary policy meeting, weighed on gold prices. Since gold is quoted in dollar as strong dollar could generate headwinds for gold prices. Gold was able to bounce at support near the 10-day moving average at 1,324. Resistance on the yellow metal is seen near the March highs near 1,340. Momentum is neutral following Wednesday fast stochastic crossover sell signal. The fast stochastic moved sideways on Thursday reflecting consolidation. The MACD (moving average convergence divergence) histogram is printing near the zero-index level with a flat trajectory which reflects consolidation.
The ECB Changed its Forward Guidance which was Unanimous
ECB unanimous on guidance tweak. Draghi confirmed that the decision on the tweak to the guidance on QE was unanimous and also played down the importance of the step, as we expected. Going forward the ECB no longer says that QE can be extended in size and/or duration, but merely states that the current schedule can be extended “if necessary” and will run “in any case until the governing Council sees a sustained adjustment in the path of inflation consistent with the inflation aim”.
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He highlighted that the option to lift monthly asset purchases was introduced at a time when the ECB announced a cut back in monthly purchase volumes, so it was essentially a tool to limit the impact of a historic move. Indeed, nobody really expected monthly purchase volumes to be lifted again and Draghi stressed that the change in language doesn’t change the ECB’s policy or reaction function, and neither has our outlook for ECB policy. At the same time Draghi also stressed that victory can’t be declared yet on inflation which seems another attempt to play down the signaling change in impact of today’s change in language.