Gold Edges Higher but the Trend Points to Lower Prices

Gold prices consolidated edging higher after breaking down this week below the 1,300 handle. An increase in German inflation data helped buoy prices. Resistance is seen near former support which coincides with the 10-day moving average at 1,305.  The 10-day moving average crossed below the 50-day moving average which means that a short-term downtrend is now in place.  Short-term momentum is negative but poised to reverse as the fast-stochastic generated a crossover buy signal in oversold territory which could foreshadow a correction.

German PPI inflation rose

German PPI inflation rose to 2.0% year over year from 1.8% year over year in the previous month and in line with our median. Reported separately wholesale price inflation rose to 1.4% year over year from 1.2% year over year. More signs then that underlying inflation is slowly but steadily moving higher, even if PPI inflation does remain below the highs seen last year.

Eurozone trade surplus widened

Eurozone trade surplus widened marginally in March to EUR 21.2 billion from EUR 20.9 billion in February. That left the total for the first quarter at EUR 62.1 billion, marginally higher than the EUR 61.6 billion reported in Q4 last year. Exports as well as imports picked up in March, after contracting sharply in February. Unadjusted data show a surplus of EUR 26.9 billion, versus a surplus of EUR 28.5 billion in March 2017. The total for the first quarter, however, lifted to EUR 49.4 billion, from EUR 42.9 billion in the first quarter last year.

Eurozone current account narrowed

Eurozone current account narrowed to EUR 32.0 billion in March from EUR 36.8 billion in the previous month. The three months trend average declined to EUR 36.2 billion from EUR 36.9 billion in the three months to February. The details show slight improvements in goods trade and services balances, but the surplus in the primary income balance declined, as did the secondary income balance. Unadjusted data show direct and portfolio investment worth EUR 30.1 billion, bringing the accumulated total for the 12 months to March to EUR 418.5 billion, considerably less than the EUR 603.9 billion in the 12 months to March last year.