Gold Price Prediction for March 26, 2018

Gold prices moved higher on Friday increasing for the 3^rd consecutive day following the Fed’s rate hike announced on Wednesday. Japanese consumer prices increased more than expected, which was somewhat offset by a stronger than expected U.S. durable goods orders. New home sales slipped but the average price of a home in the U.S. increased.

Technical Analysis

Gold prices are surging and poised to test trend line resistance that comes in near 1,355. A break of this level would lead to a test of the 2018 highs at 1,366.  Support is seen near the 10-day moving average at 1,324.  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 minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

Japan’s core CPI improved

Japan’s core CPI improved to a 1.0% year over year pace in February from the 0.9% rate of annual increase in January. Total CPI climbed to a 1.5% year over year clip from 1.4% in January. The core rate is the fastest pace since the 2.2% year over year gain in March of 2015, which gave way to -0.5% rates of decline from July to September of 2016. The BoJ’s target is a 2% core rate, so we are now half way there. However, the beating drums of global trade war threaten Japan’s export oriented growth engine, while the appreciating yen is a headwind to exports and inflation.

U.S. durable goods orders rebounded 3.1% in February after dropping a revised 3.5% in January. Transportation orders climbed 7.1% versus -9.8% and were up 1.2% excluding transportation from a 0.2% decline which was revised from -0.3%. Nondefense capital goods orders excluding aircraft surged 1.8% from -0.4% which was revised from -0.2%.

U.S. homes sales unexpectedly declined

U.S. homes sales unexpectedly declined in February, weighed down by steep declines in the Midwest and West.  According to the Commerce Department new home sales dropped 0.6% to an annual rate of 618,000 units last month. January’s sales pace was revised up to 622,000 units from the previously reported 593,000 units. Expectations were for new home sales to rise by 4.4% in February. Permits increased by 0.5% from a year ago.