The Recent Prediction For Gold Prices In The Near Future

Published on: 08/13/18 9:03 AM

Category: Uncategorised

The pressure is back on the gold prices as the United States dollar is currently demonstrating strength. There are risks for additional losses with precious metals due to the apparently increasing pace of the bearish momentum. The U.S. dollar and gold have an inverse relationship that may start to become more evident. This is in spite of the possibility of a global trade war. Fresh data from the economy of the United States is showing an improved outlook for inflation and growth.

The U.S. Retail Sales report has been updated and shows an increase in household spending for July of 0.5 percent. The forecasts for a 0.1 percent print along with the expectations of stronger consumption should help the FOMC or the Federal Open Market Committee remain on track for the implementation of increased borrowing costs as the dual mandates regarding price stability and full employment are largely achieved by the central bank.

This may result in the delivery of a rate hike by the FOMC in September due to the expectations by the Committee that further gradual increases are expected regarding the federal funds rate. The target range will have sustained and consistent expansion for inflation, labor market conditions and economic activity. This will be close to the symmetric Committee objective of two percent during the medium term. There is a risk to gold prices due to the headwinds for the next quarterly meeting. Four rate hikes are anticipated for 2018 because of the expectations reflected by the Fed Fund Futures.

Downside targets are expected for gold as it maintains the narrow range from the beginning of the month. Retail sentiment is being displayed as extreme by the IG Client Sentiment Report as gold is trading at new yearly lows. According to retail trader data, 84.7 percent of traders are currently showing net-long gold with a long to short ratio of 5.54 to 1. The number of traders decreased by 7.4 percent from yesterday and 3.1 percent compared to last week. There is a 14.5 percent increase in net-short traders from yesterday and an 8.5 percent increase from last week. The retail positioning is showing an ongoing skew contradicting the crowd sentiment. Gold is showing a broader outlook with a downside tilt as the RSI and price are reflecting the bearish formations from earlier in the year.

Gold prices are still vulnerable due to the string of lower highs. A close eye is being kept on the RSI as the upward trend occurring towards the end of June snaps with the recent developments. A bearish outlook is predicted for the prices of gold due to the indicator breaking at under thirty while pushing into oversold territory.