Gold prices were unable to push higher as the dollar gained traction following strong than expected sentiment, housing and trade data. Prices pushed above 1,361 but late in the North American Trading session reversed course closing down on the day creating and outside day. Support is seen near the 10-day moving average at 1,333. Resistance is seen near the January highs at 1,365.
The U.S. trade price report beat estimates
The U.S. trade price report beat estimates with strength in core prices and ex-agricultural export prices in particular, alongside the expected big gain in oil import prices, though with a downtick for food export prices. Price gains in recent years have been skewed toward exports. The trade price data, alongside January strength in the CPI, PPI and hourly earnings data, add to the narrative of rising inflation, though we read little into these concurrent gains beyond the uptrend in most year over year price pressures into mid-year due to hard comparisons. More generally, trade price firmness since 2016 has been led by a drop in the dollar and recovering growth abroad, and we now face an upgrade in U.S. growth prospects with the new tax and budget laws. Production restraint from OPEC and December supply disruptions lifted oil prices into January, though soaring U.S. shale output has depressed petroleum prices into February as the U.S. fills the OPEC void. Export prices ex-agriculture and import prices ex-petroleum are poised for respective gains in 2018 of 4% and 3%, following respective gains of 2.7% and 1.3% in 2017 and 1.4% and 0.3% in 2016.
The U.S. housing starts report beat estimates
The U.S. housing starts report beat estimates with big January gains for starts and permits after a small December starts boost, and a smaller than expected January completions decline. The surprisingly big gains were led by multi-family units and activity in the northeast, where we possibly had some “catch up” before month-end after a cold start to January and a weak Q4 for the region, as Q4 activity was skewed toward the south and west. We saw a firm 0.9% rise in starts under construction that leaves a robust Q4-Q1 outlook for the housing sector after a disappointing Q3.
This article was originally posted on FX Empire
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