Price of Gold – Fundamental Forecast, March 30, 2017

June Comex Gold futures are drifting sideways to lower early Thursday after posting a lower close on Wednesday. Yesterday, the market closed well off its lows, but still lower for the session. Early today, for the third consecutive session, gold is trading inside Monday’s wide range which culminated with a high at $1264.20.

The current price action suggests investor indecision and impending volatility.

The inside move is being held together by trader reaction to traditional factors. Dollar-denominated gold is being pressured by a strengthening U.S. Dollar and increasing demand for higher-yielding assets.

Gold is being supported by outside factors such as the start of Brexit talks, the French elections and concerns over President Trump’s economic policies.

On Wednesday, gold closed at $1256.80, down $2.00 or -0.16%. At 0416 GMT, the June gold futures contract is trading at $1252.40, down $4.40 or -0.35%.

Forecast

Surprisingly, volume and volatility appear to be unusually slow, but I think this relative calm is going to be changing shortly.

I go into more details in my technical analysis of gold in another section of the website, but to keep it simple, the June gold contract is currently straddling an uptrending support angle that has given the market direction since March 10. It is at $1254.00 today. Trader reaction to this price will set the early tone and bias of the market.

For bigger picture traders, a breakout and sustained move over $1264.20 could trigger a powerful rally to $1291.50. On the downside, taking out and sustaining a break under $1254.00 could trigger the start of a steep decline. However, the selling will have to be strong enough to take out $1243.70. If this price fails then look for the selling to extend into $1231.10 to $1223.30 over the near-term.

Since we are in a new driven market, it is going to be a news event that fuels the next major move. Take your pick at what the story will be. I can only say with confidence that the news will either lead to increased demand for higher risk, or lead to greater demand for safety.

Furthermore, the longer gold trades inside $1243.70 to $1264.20, the greater the response by investors once this range is broken. If we get some unexpected news then I wouldn’t be surprised if gold is $40.00 higher or $30.00 lower at this time next week from its current price.