Gold Monthly Fundamental Forecast – April 2016

Gold ended the month on an upswing at 1234.20 as the commodity gained 16.38% this year. The yellow metal only posted a gain of 0.30% this month. Gold seems to have regained some of the sheen it had lost in recent times. Driven by physical and investment demand from the US, parts of Europe, Russia, China and the Middle East it jumped 17.5% by price from a multi-year low on December 17 last year.

Gold is heading for a weekly advance before the release Friday of a US payrolls report and Chinese manufacturing data.

The metal jumped 16 per cent in the first three months of the year, the biggest quarterly surge since 1986.

The dollar fell to a nine-month low after comments this week from Federal Reserve Chair Janet Yellen, which reflected concern that global headwinds may restrain the US economy, dimming the prospects for higher interest rates.

Gold pared the biggest advance in almost two weeks as global equities surged after Federal Reserve Chair Janet Yellen reasserted the central bank’s gradual approach to raising US interest rates.

In the second quarter, the metal may rise to as much as US$1,400 as it’s now clear the Fed will proceed cautiously. In China, bullion of 99.99 per cent purity jumped as much as 1.7 per cent to 259.32 yuan a gram ($1,243.37 an ounce) on the Shanghai Gold Exchange and was at 258.55 yuan.

While lower rates are a boon for gold, the rally in global equities may erode demand for the metal as a store of value.

FxEmpire provides in-depth analysis for each currency and commodity 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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.

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