Gold Price Prediction for February 20, 2018

Gold prices are consolidating forming a bull flag pattern, after surging higher last week following a stronger than expected CPI and CPI report.  U.S. markets were closed on Monday in observance of the Presidents Day holiday.  U.S. industrial production was weaker than expected showing growth in the world’s largest economy might be weaker than expected.  Support is seen near the 10-day moving average at 1,333 while resistance is seen near the January highs at 1,365. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints near the zero-index with a flat trajectory which reflects consolidation.

January Industrial Production Dropped

The 0.1% U.S. January industrial production drop after downward revisions left a weaker than expected report, though Q4 data still show big industrial production gains before the January downtick. There was  the expected January weather-boost for utilities to a new record-high, but we saw an odd 1.0% January drop for mining output, and downward revisions to the Q4 manufacturing data before a January weather-hit. There should be a 2.0% growth rate for industrial production in Q1 after the robust 8.3% (was 8.2%) Q4 clip that marked the strongest quarter since Q2 of 2010. There was a hurricane-depressed 1.2% drop in Q3, but a solid 5.6% pace in Q2. The factory sector will outperform GDP in 2018, with estimated gains of 3.3% for industrial production and 3.0% for real GDP, after respective 2017 gains of 2.0% and 2.3%. Over the prior two years the petro-recession prompted a big underperformance for industrial production relative to GDP, with respective rates of -1.2% and 1.5% in 2016 and -0.7% and 2.9% in 2015.

U.S. NAHB housing market index was unchanged

U.S. NAHB housing market index was unchanged at 72 in February after falling 2 points to 72 in January from December’s 74). It was 65 a year ago. The current single family sales index dipped to 78 from 79. The future sales index rose to 80 from 78, and is the highest since June 2005. The index of prospective buyer traffic was flat at 54. The report indicated builders are excited about the pro-business political climate, but noted ongoing supply side hurdles, including labor shortages and building material price increases.