Gold Price Prediction for February 16, 2018

Gold prices remained elevated holding near the February highs as the dollar pulled back slightly along with U.S. treasury yields.  Prices were buoyed by stronger than expected wholesale price inflation reported on Thursday by the Department of Labor.  Core PPI was especially strong, and this comes on the heels of stronger than expected CPI data reported on Wednesday.

Technicals

Prices are poised to test target resistance near the January highs at 1,366.  Support is seen near the 10-day moving average at 1,331.  Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD index (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The only caveat is that the fast stochastic is printing a reading of 94, above the overbought trigger level of 80 which could foreshadow a correction.

Spanish HICP inflation was Unchanged

Spanish HICP inflation was confirmed at just 0.7% year over year, unchanged from the preliminary reading and down from 1.2% year over year in December. Food price inflation decelerated, and the official index for housing costs declined -2.0% year over year, after rising 1.3% year over year in December. Core CPI held steady at 0.8% year over year, lower than the highs seen in the middle of last year, but a tad above the HICP rate. Still, these are low numbers that will back the arguments of the doves at the ECB who remain reluctant to commit to an end date for net asset purchases just yet.

U.S. PPI rose in January

U.S. PPI rose 0.4% in January on both the headline and the core, a little hotter than expected, after an unchanged headline reading in December (revised from -0.1%) and a -0.1% ex-food and energy print. On a 12-month basis, PPI accelerated to 2.7% year over year versus 2.6% year over year, while the core slowed to 2.2% year over year versus 2.3% year over year. Goods prices rose 0.7%, as the 3.4% increase in energy more than offset the 0.2% dip in food prices. Services prices increased 0.3%.