Gold Fundamental Forecast – June 30, 2016

Gold prices recovered from a slight setback on Tuesday on renewed demands for safety due to the lingering uncertainty in the financial markets and a weaker U.S. Dollar. However, prices remained locked inside yesterday’s range as investors waited to see how the Brexit plan being discussed in Brussels would play out.

Prices were down on Tuesday on profit-taking following last week’s surge to two-week highs, but spot gold was able to recover a little during Wednesday’s Asian session, rising 0.6 percent to $1319.50 an ounce. August Comex Gold futures were trading $1321.60, up $3.70 or +0.28%.

A retreating U.S. Dollar helped lend support to gold prices. The dollar weakened after rates dropped in the U.S. as investors took a July rate hike off the table and while a key future rate indicator signaled a 10 percent chance of a rate cut in September.

Despite Tuesday’s weakness and today’s firmer trade, investors seem a little hesitant about playing either side of the market at current levels because of the uncertainty in the foreign currency and equity markets. Geopolitical events outside Europe are also providing an additional element of support.

Traders are also nervous about potential actions by the major central banks which could step in to calm the markets. European leaders have asked Britain to act quickly to resolve the political and economic confusion unleashed by its vote to exit the European Union, after the International Monetary Fund said the uncertainty could pressure global economic growth.

Some experts including Federal Reserve governor Jerome Powell also warned on Tuesday that Brexit could pose a new drag on the U.S. economy at a time when momentum in the U.S. job market may already be slowing.

Prime Minister David Cameron met with his European counterparts in Brussels on Tuesday to discuss the country’s position following the vote. One minister present at the meeting tweeted that the atmosphere was “serious but constructive”.

Today, gold may continue to see support since the process of withdrawing from the EU is likely to take time unless the UK triggers Article 50. However, UK politicians have said that Article 50 will not be invoked in a rush. This could help underpin gold prices over the near-term.

In other news, spot silver rose about 1.5 percent to $18.01 per ounce. July Comex Silver was up $0.302 at $18.145. October Platinum climbed 1.14% to $991.80. September Palladium futures reached its highest level since May 19 at $574.30, up $4.35 or +0.76%.

FxEmpire provides in-depth analysis for each asset we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

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Thursday, June 30, 2016

Government Bond Auctions

Jun 30 11:10 Italy Holds bond auction