Gold Price Prediction – Prices Fall on Dollar Gains Following Fed Decision

Gold prices moved lower in the wake of the Fed decision.  The dollar is poised to break out creating a bull flag pattern.  Yields also moved higher across the interest rate curve but flattened as the markets started to price in further interest rate hikes. The Fed changed their dot plots to incorporate 3-rate hikes in 2022.

Technical Analysis

Gold prices dropped. Resistance is seen near the 10-day moving average at 1,777. Support is seen near an upward sloping trend line that comes in near 1,742. The 10-day moving average has crossed below the 50-day moving average, which means a short-term downtrend is in place. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term negative momentum is poised to turn positive as the MACD (moving average convergence divergence) index is about to generate a crossover buy signal.

The Federal Reserve provided the markets a decision to accelerate the unwind of their bond purchase program, which was widely expected. The Fed doubled the size of their tapering to 30-billion dollars from 15-billion dollars a month and kept rates unchanged. The medium interest rate for 2022 is 0.9% larger than prior but also priced into interest rate futures contracts.