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Gold Fundamental Forecast – May 26, 2016

By:
James Hyerczyk
Published: May 25, 2016, 11:47 UTC

August Comex Gold futures continued to weaken, falling to a seven-week low as global equities rallied along with the U.S. Dollar. Both moves hurt demand

Gold Fundamental Forecast – May 26, 2016

August Comex Gold futures continued to weaken, falling to a seven-week low as global equities rallied along with the U.S. Dollar. Both moves hurt demand for the non-yielding precious metal.

The U.S. futures contract was trading at $1224.40, down, $7.80 or -0.63%. Spot gold was down 0.47 percent at $1226.60 an ounce, off an earlier low of $1220.24.

Bullish gold traders cite the fact that gold is still out-performing stocks in 2016 despite the stronger dollar and the threat of multiple interest rate hikes. Investors have been aggressively buying the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, all year. On Tuesday, however, holdings in the fund declined for the first time in a month, dropping 0.44 percent to 868.66 tonnes.

Gold prices could accelerate to the downside if investors in the gold ETF decide to book profits and liquidate positions. This would lead to a huge amount of gold hitting the cash market.

There are no major economic reports today, but three Fed members are scheduled to speech. Hawkish comments from these members could underpin the dollar and send another wave of sellers into the gold market. Greater demand for higher-yielding assets like stocks will also pressure gold which doesn’t pay a dividend or interest.

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.

Today’s economic releases:

Cur. Event Actual Forecast Previous
  USD API Weekly Crude Oil Stock -5.137M -3.300M -1.140M
  USD API Weekly Cushing Crude Oil Stock -0.189M -0.950M 0.508M
  NZD Trade Balance (MoM) (Apr) 292M 60M 117M
  NZD Trade Balance (YoY) (Apr) -3,660M -3,940M -3,380M
  AUD Construction Work Done (QoQ) (Q1) -2.6% -1.5% -3.6%
  EUR GfK German Consumer Climate (Jun) 9.8  9.7 9.7
  EUR German Business Expectations (May) 101.6 100.8 100.4
  EUR German Current Assessment (May) 114.2 113.2 113.2
  EUR German Ifo Business Climate Index (May) 107.7 106.8 106.6
  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   -2.450M 1.310M
  USD Cushing Crude Oil Inventories     0.461M
  USD FOMC Member Kashkari Speaks      
  USD FOMC Member Kaplan Speaks      
  AUD Private New Capital Expenditure (QoQ) (Q1)   -3.0% 0.8%

30-minute Gold

Upcoming Economic Events that you should be monitoring:

Thursday, May 26, 2016

Cur. Event Actual Forecast Previous
  GBP BBA Mortgage Approvals   44.8K 45.1K
  GBP Business Investment (QoQ) (Q1)   0.1% -2.0%
  GBP GDP (YoY) (Q1)   2.1% 2.1%
  GBP GDP (QoQ) (Q1)   0.4% 0.4%
  USD FOMC Member Bullard Speaks      
  USD Core Durable Goods Orders (MoM) (Apr)   0.3% -0.2%
  USD Durable Goods Orders (MoM) (Apr)   0.5% 1.3%
  USD Initial Jobless Claims   275K 278K
  AUD RBA Assist Gov Debelle Speaks      
  USD Pending Home Sales (MoM) (Apr)   0.6% 1.4%
  USD FOMC Member Powell Speaks      
  AUD RBA Assist Gov Debelle Speaks      
  JPY National Core CPI (YoY) (Apr)   -0.4% -0.3%
  JPY Tokyo Core CPI (YoY) (May)   -0.4% -0.3%

Government Bond Auctions

May 25 11:03 Sweden Sek 1bn 3.5% 2022 & Sek 3bn 1% 2026 bonds

May 25 11:05 Norway Holds bond auction

May 25 11:30 Germany Eur 1bn 2.5% Jul 2044 Bund

May 25 19:00 US Holds 5Yr Notes Auction, 2Yr FRN

May 26 11:10 Italy Announces details of bond auction

May 26 11:10 Italy Holds Zero-coupon/BTPei auction

May 26 17:20 Sweden Details of I/L auction on Jun 02

May 26 19:00 US Holds 7Yr Notes Auction

May 30 11:10 Italy Holds bond auction

Jun 01 10:30 Denmark Holds bond auction

Jun 01 11:30 Germany Eur 4bn Apr 2021 Bobl

Jun 01 11:30 UK 1.5% 2021 Gilt

Jun 01 17:20 Sweden Announces details of bond auction on Jun 08

Jun 02 10:30 Spain Holds bond auction

Jun 02 11:03 Sweden Holds I/L bond auction

Jun 02 11:50 France Holds bond auction

 

 

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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