Gold Prices Prediction – Gold Consolidates Following FOMC Minutes
Gold prices moved lower in late trading after hitting a fresh high for 2019. Prices were higher ahead of Fed minutes but the dovish commentary triggered a round of profit-taking. The Fed minutes were bearish for the dollar and bullish for riskier assets, which should pave the way for higher gold prices. Japan reported weaker than expected export data, which should keep the Bank of Japan in an accommodative mode, helping gold prices gain traction.
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Technical Analysis
Gold prices hit a fresh high for 2019, moving up to 1,346, before turning around into the close of the North American trading session. Resistance is seen near the 2018 highs at 1,365, while support is seen near the 10-day moving average at 1,318. Momentum remains positive as the MACD (moving average convergence divergence) histogram is printing in the black with a rising trajectory which points to higher prices. The fast stochastic appears to have halted its upward momentum and is currently printing a reading of 89, well above the overbought trigger level of 80 which could foreshadow a correction.
Fed Minutes Where Dovish
The FOMC minutes were released on Wednesday. Federal Reserve officials favored ending the runoff of the central bank’s balance sheet, which is a dovish sign, expressing uncertainty over whether they would raise interest rates again in 2019.
Japan Reports Weak Trade Data
Japan reported January trade data. Exports declined by 8.4% compared to expectations that they would contract by 5.7% year over year. Imports were better than expected declining 0.6% year over year compared to expectations they would contract by 3.5%. As a result, the adjusted deficit came in at -JPY370 billion vs. -JPY150.7 billion expected. The drop in exports is clearly worrisome.
Governor Kuroda said today that the BOJ does not target exchange rates. He was walking back his recent statement that a stronger yen could force the BOJ to enact more stimulus. Next policy meeting is March 15, no change is expected.