Gold prices moved lower as the dollar returned and US yields sideways. The rally in the greenback came because the dollar has been selling too much by declining more than 10% since hitting a high in March. The minutes of the Fed’s meeting in July showed that Fed officials were concerned that the spread of the coronavirus could continue to weigh on economic growth.
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Technical analysis
Gold prices dropped nearly 3%, eliminating the week’s gains in a day after two consecutive days of more than 1% upside. Prices cut by short-term support near the 10-day moving average at 1,978, which is now seen as resistance. Target support is seen close to the 50-day moving average at 1,855, but appears to be about generating a crossover sell signal. Medium-term momentum remains negative as the MACD histogram pushes into the red with a slide pointing to lower prices.
Fed Minutes Concerns Show
The Federal Open Market Committee expressed concern at its recent meeting on the future of the economy. If the virus stays out of control, the economic output can contract. Officials at the meeting agreed that the ongoing crisis for public health would weigh heavily on economic activity, employment, and inflation. Comments indicate that while members are pushing to add clarity to their expectations for when they will raise rates again, they appear to be rejecting the opportunity of bond purchases to control the yields on government bonds.
