Gold Rallies as Momentum Turns Positive

Gold prices rallied as the dollar eased, as jobless claims rose, and the Fed’s Kaplan said the Fed was willing to let the economy run a little above or below targets inflation. The yellow metal rallied nearly $12 per ounce, but failed to take out resistance near the 1,304 level. Support is seen near the 10-day moving average at 1,297.  Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average convergence divergence) index generated a crossover buy signal.

FHFA home price index rose

FHFA home price index rose 0.1% to 261.7 in March, after a 0.8% increase in February to 261.6. Four of the nine regions posted gains, led by the mid-Atlantic, while four regions declined, paced by New England, with the East North Central unchanged. On a 12-month basis, home prices are up 6.7% year over year thanks to strong gains in the Mountain and Pacific areas. Q1 home prices are up 1.7% year over year and are up 6.9% year over year.

Fed’s Kaplan said the Fed can run a little above, or a little below the 2% inflation goal. Kaplan doesn’t view “symmetric” as having to match the time inflation has run below target, with the time it needs to run above the goal. He could tolerate a short term rise above 2%, but it would impact his views if prices were to run “persistently” above that level. HE thinks the FOMC should persue a gradualist policy and continue to hike rate until neutral is achieved, which in his view is in the 2.5% to 2.75% area.

U.S. initial jobless claims rose

U.S. initial jobless claims rose 11k to 234k in the week ended May 19. That follows the 12k rise to 223k in the May 12 week which corresponded with the BLS survey week. The 4-week moving average was pushed up to 219.75k from 213.5k. Continuing claims were up 29k to 1,741k in the May 12 week, after tumbling 82k to 1,712k previously. Despite the gains in the past two weeks for initial claims, the level remains near a 50-year low.