Gold Price Prediction for February 12, 2018

Gold prices were under pressure on Friday but generated an inside day which is a lower high and a higher low which is a reflection of indecision.  A stronger dollar which has been buoyed by higher U.S. treasury yields is weighing on the yellow metal.  Since gold is priced in dollars, a stronger dollar makes gold more expensive in other currencies. Softer than expected Chinese inflation weighed on gold prices.

The Technicals Points to Lower Prices

Prices are fast approaching support near the 50-day moving average at 1,304.  Resistance on the yellow metal is seen near the 10-day moving average at 1,332. Momentum is negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices for gold.  The MACD index generated a crossover sell signal in mid-January.  The RSI (relative strength index) broke down to new lows which reflects accelerating negative momentum. The current reading on the RSI is 43, which is in the middle of the neutral range and reflects consolidation. The fast stochastic which is also a momentum oscillator, was unable to take out the old low. The current reading of the fast stochastic is 12, which is below the oversold trigger level of 20, which could foreshadow a correction in prices. The fast stochastic also generated a crossover sell signal as the index, crossed below the 3-day moving average of the index which points to lower prices in the short-term.

China’s consumer inflation cooled to 1.5% in January

China’s consumer inflation cooled to 1.5% in January, in line with economists’ forecasts, official data showed on Friday. The consumer price index had been expected to moderate from a 1.8 percent gain in December. The producer price index rose 4.3% from a year earlier, also cooling from the previous month’s rise of 4.9 percent, the National Bureau of Statistics said on its website. Analysts polled by had predicted producer inflation would ease to 4.4 percent in January. Lower inflation in China could reduce the demand to purchase hard asset such as precious metals.