Gold Price Prediction – Prices Consolidate Following Softer Mortgage Data

Gold prices slipped and consolidated after rallying late last week. The upward trend in the greenback has capped the upward momentum in gold prices. U.S. Yields moved lower, but following Tuesday’s softer than expected retail sales report and homebuilder sentiment report.

Technical analysis

Gold prices slipped gain on Wednesday, failing to recapture resistance near the 20-day moving average at 1,778. Target support is seen near the March lows at 1,677. Short-term momentum has turned negative as the fast stochastic generated crossover sell signal.  Medium-term negative momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This buy signal 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).

 Refinancing Declines Due to Higher Rates

According to the Mortgage Bankers Association, applications to refinance a home loan fell 5% last week from the previous week and were 8% lower than a year ago. Mortgage rates are slightly lower than they were last August but not as low as last fall, when there was a mini refi boom. Borrowers backed away from the mortgage market last week, as higher interest rates chilled a recent revival in refinances. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan increased to 3.06% from 2.99.