Gold Prices Consolidate as Momentum Turns Positive
Gold prices consolidated after rebounding sharply on Thursday, as the dollar lost ground against most currencies except the Euro. Yields in the U.S. are declining moving away from 3%, following the Feds meeting minutes that showed that central bank will allow inflation to run above target. The softer than expected U.S. durable goods orders helped U.S. yields softening paving the way for higher gold prices. Gold ran up to resistance near the former breakdown level near 1,305. Additional resistance is seen near the 10-day moving average at 1,296. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal.
Durable Goods Orders Fell
U.S. durable goods orders fell 1.7% in April after March’s 2.7% increase which was revised from 2.6%. Transportation orders fell 6.1% after the prior 6.9% gain. Excluding transportation, orders climbed 0.9% versus a 0.4% gain previously. Nondefense capital goods orders excluding aircraft were up 1.0% from -0.9%. Shipments dipped 0.1% from 0.7% previously, with nondefense capital goods shipments ex-aircraft up 0.8% versus -0.7% which was revised from 2.2%. Inventories were up 0.3% from 0.2% which was revised from 0.1%. Despite the headline decline, it’s a rather healthy report.
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German Ifo reading stabilized
German Ifo reading stabilized. The headline number remained steady at 102.2, with April revised up from 102.1 reported initially. So finally, a stabilization in the index, after 5 months of decline. As expected the current conditions indicator improved while the expectations reading fell back slightly to 98.5 from 98.7. The breakdown showed a slight dip in the manufacturing diffusion index, which gives the balance of positive and negative answers, but sentiment improved across services, trade and construction sectors. All in all a cautiously positive report that backs expectations for a pick up in GDP growth in the second quarter of the year, but the fact that the expectations reading corrected for a third months highlights that the balance of risks remains tilted to the downside.