Gold up on fundamentals while technical indicator signals $1,400

Was there a single unadulteratedly positive U.S. economic report issued Tuesday? No, and thats why gold gained again ahead of tomorrows Federal Reserve policy statement.

The yellow metal gained about 0.3% to trade near $1,243 by early afternoon. Silver also advanced and was holding above $17 at $17.08 in the afternoon session.

Durable goods disappoint: For starters, although durable-goods orders rose in March, they gained less than expected, just 0.8% versus an anticipated 1.8%. Moreover, the core durable-goods number fell for the 14th straight month, something that has never happened outside of a recession, Zero Hedge noted.

Meanwhile, the Richmond branch of the Fed issued its manufacturing survey, which posted its biggest drop since August.

The American citizen continues to feel the pain of the economys anemic growth, with The Conference Boards consumer-confidence index falling way more than expected.

And after Mondays plummeting new-home sales data, the Case-Shiller housing-price report showed the slowest growth since September and missed expectations for the fifth month in a row.

GDP stuck under 1%: Although Markits PMI report for the service sector came in at expected levels, its well below its peak hit in 2014. The upturn in the rate of growth of business activity and increased inflows of new orders suggest the economy should see GDP rise at an increased ratein the second quarter, but growth is clearly far more fragile than this time last year, said Markit chief economist Chris Williamson.And what would that growth rate be? The survey suggests the economy grew at an annualized rate of just 0.8% at the start of the second quarter.

Well get a better look at the first quarters growth rate when the government releases its GDP estimate Thursday, but for now, the Atlanta Fed has second-quarter GDP at just 0.4%, up slightly from the previous 0.3%.

The continuing onslaught of weak economic data boosted gold prices by lowering expectations of a Fed rate hike. A new CNBC survey now shows Wall Street anticipating a more dovish Fed in April than it did back in March, with the next rate hike not expected until much later this year.

Another bear turns bullish, buys gold: Lowered rate-hike expectations are one reason why HSBC is sticking to its forecast of $1,300 gold prices this year. And now another long-time gold bear has turned bullish. Independent Strategy Ltd. President David Roche has told Bloomberg he is now buying gold.

Weve increased our holdings of gold; now, thats after a long, long time being short, he said Tuesday. The reason for that is because we dont know what central banks are going to do next. Investors need bullion as an insurance policy against that uncertainty, he said.

The technicals also are signaling further momentum in gold. According to Nedbank Capital in Johannesburg, gold now appears to be forming a so-called pennant, a chart pattern resembling a triangular flag at the end of a pole. That suggests it is about to resume gains to as high as $1,400 an ounce, Bloomberg relayed.

Stay tuned for the results of the meetings of the Fed and the Bank of Japan later this week for further clues on where gold might be headed.

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