Gold Price Prediction for February 2, 2018

Gold prices rebounded from session lows and generated a doji day which is an open and close at the same level.  Prices were able to bounce of support near the 10-day moving average at 1,342.  Prices are continuing to form a bull flag continuation pattern which is a pause that refreshes higher.  Solid Eurozone PMI manufacturing  data along with softer than expected U.S. productivity weighed on the dollar paving the way for a rebound in gold prices.  Prices are poised to test resistance near the January highs at 1,366.  Momentum is negative as the MACD (moving average convergence divergence) index prints in the red. This will make it difficult for prices to break out despite a declining dollar.  The RSI is also moving sideways which reflect consolidation.

Eurozone PMI Confirmed

Eurozone manufacturing PMI confirmed at 59.6. The final Eurozone number of 59.6 is down from 60.6 in December, but Markit reported a strong start to 2018 adding that while rates of growth in output and new orders eased slightly from near record highs in December they remained among the best seen since the survey began in 1997 and signalled solid growth across the consumer, intermediate and investment goods categories. At the same time, Markit reported a pick up in inflationary pressures at the start of 2018 with “both output charges and input prices rising at faster rates”.

U.S. Productivity Eased Increasing Labor Costs

U.S. preliminary Q4 nonfarm productivity rate posted a 0.1% decline following the 2.7% Q3 gain which was revised from 3.0%, with Q2 up 1.5%, and Q1 up 0.1%. Unit labor costs rose 2.0% last quarter after declining 0.1% in Q3 which was revised from -0.2%, a 1.2% drop in Q2 and a 4.8% Q1 surge. Output slowed to a 3.2% pace versus 4.0% which was revised from 4.1% previously. Employee hours more than doubled to a 3.3% rate versus 1.2% which was revised from 1.1%. Compensation per hour came in at a 1.8% pace from 2.7%. The price deflator rose to 2.4% from 2.0% which was revised from 2.1%. Real compensation dropped 1.8% after rising 0.6% which was revised from 0.7%.