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David Becker

Gold prices edged higher but continue to trade sideways in a downward sloping channel. US yields moved lower which helped buoy the euro, putting upward pressure on gold prices. Hedge funds dropped nearly 10% of the open interest in futures and options according to the latest commitment of traders report. US Housing starts and Building Permits came in stronger than expected but failed to lift US yields or the dollar.

 

 

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Technical Analysis

Gold prices continued to edge higher in a downward sloping trend channel. Prices are squeezed between support near the 10-day moving average at 1,467, and the  100-day moving average at 1,480. The 10-day moving average crossed below the 100-day moving average which would show that a short-term downtrend is in place. Short term momentum has turned positive but is beginning to decelerate. The fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 35 accelerating from below the oversold trigger level, but the decline in the trajectory points to consolidation.  Medium-term momentum is negative to neutral as the MACD histogram is printing in the red with a rising trajectory which points to consolidation.

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Housing Start Rebound

U.S. Housing starts rose in October and permits for future home construction jumped to a 12-year high. Housing starts increased by 3.8% to an annual rate of 1.314 million units last month, with single-family construction rising for a fifth straight month. Data for September was revised to show homebuilding declining to a pace of 1.266 million units, Expectations were for housing starts to increase to a pace of 1.320 million units in October. Housing starts advanced 8.5% on a year-on-year basis in October. Building permits surged 5.0% to a rate of 1.461 million units in October, the highest level since May 2007. Permits were driven by the single-family housing segment, which increased 3.2% to an 11-year high.

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