Gold Price Prediction for February 8, 2018

Gold prices moved lower on Wednesday as the dollar gained traction, which paved the way for lower gold prices.  Hedge funds are offsides in their positions in futures and options which could generate a long liquidation. Worse than expected German Industrial production took some of the steam out of the EUR/USD currency pair which weighed on gold prices.  Prices are poised to test target support near the 50-day moving average at 1,302.  Resistance is seen near the 10-day moving average at 1,338.  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. The RSI also continued to move lower reflecting accelerating negative momentum. The current reading of 43 is in the middle of the neutral range.

German IP Corrected

German industrial production corrected -0.6% month over month in December, broadly in line with expectations after a 3.1% month over month rise in November. Manufacturing and minding production both contracted, while energy production picked up after a -5.3% month over month slump in November. Calendar factors are partly to blame for the swings over the November/December period that left production up 0.7% in Q4, down from 1.1% quarter over quarter in the third quarter of the year and tying in with expectations for a slight deceleration in overall growth in Q4.

U.S. MBA mortgage market index rose

U.S. MBA mortgage market index rose 0.7% along with a flat purchase index and 0.9% gain in the refinancing index for the week ended February 2. The average 30-year fixed mortgage rate ramped up 9 basis points to 4.50%, which was the highest level since April 2014. The transition to new Fed leadership and surprise uptick in the wage data in the January payrolls report drove underlying benchmark yields to the highest level in 4-years before contributing to stock market indigestion and volatility. The Fed has been cautious and deliberate about its policy normalization speed and destination, and this is not likely to change under Powell, though wider signs of pick-up inflation could alter that path.