Gold Price Prediction for February 15, 2018

Gold prices soared as inflation expectations climb in the wake of the hotter than expected U.S. CPI report. Initially gold prices sold off as the dollar rallied but owning gold during accelerating inflation is a prudent trade.  U.S. retail sales were softer than expected on the headline but the internals actually better than expected.

Gold prices surged higher rising $20 per ounce and poised to test the January highs at 1,366. Support is seen near the 10-day moving average at 1,331.  Momentum is positive, but prices are overbought according to the fast stochastic which surged higher which reflects accelerating positive momentum. The current reading of 95 is above the overbought trigger level of 80.  Negative momentum is decelerating as the MACD histogram prints in the red with an upward sloping trajectory which points to consolidation.

U.S. CPI surged 0.5% in January with the core rate 0.3% higher, both hotter than expected. The December headline and core rates were each 0.2% higher. The 12-month headline rates were steady at 2.1% year over year for the headline and 1.8% year over year for the core. Internals showed energy rose 3.0% from the prior -0.2%. Services prices were 0.3% higher. Housing costs increased 0.2%, with the owners’ equivalent rent measure up 0.3%. Food/beverage prices edged up 0.2%. Apparel costs climbed 1.7%. Transportation costs were 1.8% higher. Medical care was up 0.4%. Tobacco prices increased 0.3%.

U.S. Retail Sales Fell in January

U.S. January retail sales fell 0.3%, with the ex-auto component unchanged. The December 0.4% headline increase was revised down to flat, with the ex-auto now at 0.1% versus the prior 0.4%. The sales figure excluding autos, gas, and building materials was unchanged, with December revised to unchanged from 0.4% previously. Vehicle sales declined 1.3% after a 0.1% December dip (revised from 0.2%). Building materials dropped 2.4%. Health and personal care fell 1.2%, with sporting goods off 0.8%. On the positive side, gas station sales increased 1.6%, as did miscellaneous sales, while clothing increased 1.2%. Non-store retailers were flat.

German January HICP inflation was confirmed

German January HICP inflation was confirmed at 1.4% year over year in line with the preliminary number and versus 1.6% year over year in December. the national CPI rate was confirmed at 1.6% year over year versus 1.7% year over year in December. Energy price inflation continued to decelerate, which contributed to the decline in the headline rate and compensated for higher food prices.