Gold Prices Rebound as Options Traders Bet on Rising Prices

Gold prices rebounded from session lows following a report that showed large options interest in out of the money calls which helped buoy prices during the North American Trading session. Forty six thousand contracts of the GLD gold ETF were purchased as investors bet the prices would rise by May 18.  Housing starts in the U.S. rebounded after falling in February.

Technicals

Gold prices bounced from support near the 10-day moving average at 1,339. Resistance on the yellow metal is seen near the April highs at 1,365. Prices need to close above the 1,365 level for an uptrend to resume. Momentum is positive as the MACD histogram prints in the black with a rising trajectory which points to higher prices.

U.S. March housing starts rebounded 1.9% to 1.319 million after falling 3.3% to 1.295 million which was revised from 1.236 million, January starts were bumped up to 1.339 from 1.329 million. Building permits rose 2.5% to 1.354 million after falling 4.1% to 1.321 million. Compared to last March, starts are up 10.9% year over year versus 0.5% year over year. Starts were higher in the Northeast and the Midwest, but lower in the South  and the West. Single family starts dropped 3.7% to 0.867 million following the 0.1% February gain to 0.900 million. Multifamily starts climbed up 14.4% to 0.452 million from 0.395 million. Housing completions declined 5.1% to 1.217 million after rising 5.5% previously.

German ZEW investor confidence fell back

German ZEW investor confidence fell back to -8.2 from 5.1% in the previous month. This is a more pronounced correction than anticipated and the first time sine July 2016 that pessimists outnumbered optimists. Back then it was the unexpected outcome of the Brexit vote that knocked confidence back and the index recovered in the following month. Apart from that one off negative number we have to go back to November 2012 to find negative readings. A clear warnings sign, even if the ZEW is surveying investors rather than the real economy and will thus be more impacted by market volatility and global uncertainties, which may or may not materialize.