Gold Price Prediction for March 14, 2018

Gold prices were slightly higher on Tuesday and formed a doji day where the open and the close were near the same level which reflects indecision. Prices rebounded sharply from support level near and upward sloping trend line that comes in near 1,3,12.  Tuesday Consumer Price Index came out in line with expectations which failed to stoke inflation fears, but also kept the dollar capped. Since gold is quoted in dollars, a stronger dollar weighs on gold prices. Prices were able to recapture resistance which is now short-term support at the 10-day moving average at 1,323.  Additional resistance is seen near the March highs at 1,340. A close above this level would lead to a test of the February highs near 1,360. Momentum is positive to neutral as the fast stochastic recently generated a crossover buy signal. The MACD histogram on the other hand, is printing near the zero-index level with a flat trajectory which reflects consolidation.

Inflation was Stable

U.S. CPI rose 0.2% in February for both the headline and core rates There were no revisions to January gains of 0.5% and 0.3%, respectively. The 12-month pace accelerated to 2.2% year over year which was the fastest since last March from 2.1% year over year previously for the headline, but was flat at 1.8% year over year for the ex-food and energy component. Energy costs were up 0.1% last month versus 3.0% in January, with transportation unchanged after the 1.8% gain previously. Apparel prices remained firm, up another 1.5% after surging 1.7%. Housing costs increased 0.3% versus 0.2%, with owners’ equivalent rent up 0.2% versus the prior 0.3%. Food/beverage prices were unchanged. Medical care costs dipped 0.1%. Personal computer prices dropped 1.2%. The data aren’t surprising and shouldn’t be problematic for the FOMC, leaving the gradual tightening approach in place.

Spanish Inflation was Also Subdued

Spanish Feb HICP inflation confirmed at 1.2% year over year as expected. The pick up from 0.7 %year over year in the previous month reversed the dip in the headline rate at the start of the year that was mainly due to base effects from housing. The HICP rate remains far below the ECB’s 2% limit for price stability, but central bankers are starting to see encouraging signs in underlying inflation.