Gold Price Prediction for March 1, 2018

Gold prices consolidated at lower levels after breaking through trend line support on Tuesday.  Resistance is seen near the breakdown level which coincides with the 10-day moving average near 1,332. A strong dollar and higher U.S. yields are weighing on gold prices.  Support is seen near the February lows at 1,305.  Momentum is negative as the MACD (moving average divergence) histogram is moving lower reflecting accelerating negative momentum. The fast stochastic recently generated a crossover sell signal but the current reading is 13, well below the oversold trigger level and could foreshadow a correction.

U.S. MBA mortgage market index rose

U.S. MBA mortgage market index rose 2.7%, accompanied by a 6.2% increase in the purchase index and a 1.2% drop in the refinancing index for the week ended February 23. The 30-year fixed mortgage rate was unchanged at 4.64% after rising virtually non-stop about a half-percent so far this year. Signs of rising inflation and anxiety about overheating and potentially up to four rate hikes from the Fed this year have kept mortgage rates on the rise but for the brief dip during the volatility episode earlier in the month. Fed’s Powell in his semi-annual testimony Q&A yesterday acknowledged that the pace of MBS QE wind down by the Fed was unsteady, as rising rates lowered refinancing rates.

U.S. Q4 GDP growth was revised down

U.S. Q4 GDP growth was revised down to 2.5% versus the 2.6% pace from the Advance report, and it compares to the 3.2% clip in Q3. Personal consumption was left unchanged at a 3.8% clip, which is up from the 2.2% in Q3. Business fixed investment was revised higher to 8.1% from the 7.9% Advance rate, and Q3’s 2.4%, with support from a 13.0% growth pace in residential spending from 11.6% initially, and a downward adjustment to nonresidential to 6.6% from 6.8%. Government spending was nudged to 2.9% versus 3.0%. Inventories subtracted $30.5 billion. Net exports subtracted $54.7 billion. The chain price index slowed to 2.3% versus 2.4% previously and 2.1% in Q3, while the core rate was steady at the 1.9% pace in the Advance report, though is up from 1.3% in Q3.