Gold Price Prediction for March 23, 2018

Gold prices reversed Wednesday rally and slipped slightly as traders took profits.  Prices soured on Wednesday as the hawkish comments from new Fed chair Powell was somewhat muted. Support is seen near the 10-day moving average at 1,321.  Resistance is seen near the March highs at 1,340.  Momentum on the yellow metal has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the e26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

Fed Chairman Powell has concluded his debut

The markets have to contend with a variety of factors. Foremost for the markets, the dot plot took on a steeper trajectory, even though the medians remained at 3 for this year and next. However, Powell wasn’t particularly hawkish in his press conference. Indeed he was asked about the still rather tame inflation outlook in spite of the large increase in the growth outlook. And he played down, to some extent, the upward shift in some of the SEP measures, and especially the dots, noting that they are just individual views of the 15 member FOMC.

The BoE Left Rates Unchanged

The BoE left the repo rate and QE totals unchanged, as had been widely anticipated, but with unexpected dissention in the ranks with two of the seven MPC members voting for a 25 basis point hike. The repo rate remained at 0.5%, with the asset purchase target left at GBP 435 bln and the corporate bond target at GBP 10 billion. Members McCafferty and Saunders were the dissenters, basing their views on what they see as near zero spare capacity and accelerating wage growth. Sterling initially rallied on news of the hawkish dissention, but subsequently dipped with a closer look at the minutes showing some more circumspect views at the MPC, with net trade and business investment noted as an area of weakness, bad weather seen as having a negative impact on Q1 growth, and U.S. tariffs greeted as an “unwelcome” development.