Gold Price Prediction – Gold Prices Pull Back as Dollar Gains Traction

David Becker
Published: Mar 26, 2019, 19:19 GMT+00:00

Housing starts buoys yields paving the way for lower gold prices

Comex Gold

Gold prices pulled back after suring higher on Monday. Prices formed an inside day which is a sign of market indecision. Softer than expected US housing starts, initially put downward pressure on US yields which weighed on the dollar. As the trading session moved into the afternoon, US yields rebounded, allowing the dollar to gain traction which put downward pressure on gold prices.

Technical Analysis

Gold prices moved lower forming an inside day which is a lower high and a higher low which is a sign of indecision. Short term support is seen near the 10-day moving average at 1,309. Additional support is seen near the 50-day moving average at 1,307. The 10-day moving average crossed above the 50-day moving average which means that a short-term uptrend is now in place. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (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 MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices and accelerating positive momentum.

Housing Starts Drop more than Expected

US Housing starts dropped 8.7% to an annual rate of 1.162 million units in February according to the Commerce Department. This was an 18-month low for single family homes and an 8-month low for housing starts.  The commerce department said that bad weather might have contributed to the slow housing start rate. Building permits fell 1.6% to a rate of 1.296 million units in February. While that was the second straight monthly drop in permits, they are now outpacing starts. Builing permits are a gauge of future housing starts. Expectations were for housing starts to decline to a pace of 1.213 million units in February

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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