Gold Fundamental Forecast – May 25, 2016

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Published: May 24, 2016, 10:46 UTC

Gold took a big hit today giving up almost $10 as more and more Fed hawks hit the speak circuit. Gold is trading at 1242.35. Gold will head much lower if

Gold took a big hit today giving up almost $10 as more and more Fed hawks hit the speak circuit. Gold is trading at 1242.35. Gold will head much lower if the US dollar continues to strengthen

To take note of, the last time the DXY was trading at the 100-point mark, back in December 2015, gold was changing hands at $1,050/oz. and there was no reason for that not to happen again should the dollar revisit that level, analysts at Citi said in a research report sent to clients.

Indeed, should DXY rise past the 100-point level there was nothing standing in the way of gold dropping below $100/oz., Citi added.

Gold dipped to a 3-1/2-week low on Monday as expectations rose that the US Federal Reserve will hike interest rates as early as June, but prices came off their lows as late-day short-covering entered the market.

Bullion has been under pressure since the Fed last week released the minutes of its April meeting, which showed officials believe the US economy could be ready for another rate increase next month. Higher interest rates increase the opportunity cost of holding non-yielding bullion.

US rates being kept too low for too long could cause financial instability and stronger market expectations for a rate increase are “probably good,” St. Louis Federal Reserve President James Bullard said on Monday.

“The Fed minutes were clearly more hawkish than expected and this has resulted in some change in sentiment and there is now an increased likelihood that they may raise rates in June ..

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.

Upcoming Economic Events that you should be monitoring:

Wednesday, May 25, 2016

Cur.	Event	Actual	Forecast	Previous
USD	API Weekly Crude Oil Stock			-1.140M
NZD	Trade Balance (YoY) (Apr)		-3,940M	-3,380M
NZD	Trade Balance (MoM) (Apr)		60M	117M
AUD	Construction Work Done (QoQ) (Q1)		-1.5%	-3.6%
EUR	EU Finance Ministers Meeting
USD	Goods Trade Balance (Apr)		-60.10B	-56.90B
USD	FOMC Member Harker Speaks
USD	Services PMI (May)		53.1	52.8
CAD	Interest Rate Decision		0.50%	0.50%
USD	Crude Oil Inventories			1.310M
USD	FOMC Member Kashkari Speaks
USD	FOMC Member Kaplan Speaks