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Price of Gold – Fundamental Forecast, Week of April 24, 2017

By:
James Hyerczyk
Updated: Apr 24, 2017, 11:50 UTC

Gold futures finished lower last week in a lackluster trade for its first weekly loss in six weeks. The primary cause for the price action was caution

Price of Gold – Fundamental Forecast, Week of April 24, 2017

Gold futures finished lower last week in a lackluster trade for its first weekly loss in six weeks. The primary cause for the price action was caution ahead of Sunday’s French election.

June Comex Gold settled at $1289.10, up $0.60 or +0.05%.

After starting the week with a surge into $1297.40, its highest level since November 10, prices retreated to $1275.40, before rallying into its weekly close.

The initial rally was fueled by flight-to-safety buying caused by concerns over Syria and North Korea. While the news about Syria may have cycled out, worries about a possible military conflict in North Korea helped underpin the market throughout the week.

On April 19, gold futures plunged 1 percent as the dollar and stocks gained. The U.S. Dollar was boosted by a rise in the 10-year Treasury yield. Rumors also surfaced that a large fund in the Far East was selling gold. This put fear into some weaker speculators, encouraging profit-taking and liquidation. However, buyers concerned over the events this Sunday in France, came in to stop the price slide.

Gold was able to survive the sell-off, grinding back to slightly unchanged into the close. Putting a lid on the rally were concerns over the French elections, a firmer U.S. Dollar and increased demand for higher-yielding assets like stocks.

Comex Gold
Weekly June Comex Gold

Forecast

All eyes are on the French election this weekend, as the outcome may have a significant impact on the price of gold in the coming months. The general consensus among investors is that gold prices could firm if French presidential candidate Marine Le Pen gets into a runoff.

Early in the week, the polls showed that Le Pen was trailing candidate Emmanuel Macron, but the killing of a policeman on Thursday in an act of terrorism, may have helped the candidacy of Le Pen.

The election is too close to call which may be why gold investors mostly kept to the sidelines last week.

After gold investors react early in the week to the French elections, the focus will shift to the U.S. on Wednesday, the Trump administration is expected to unveil a tax reform plan. Gold could be capped by this news especially if stocks rally and investors throw money at higher yielding assets.

Later in the week, Congress may start to debate the process of shutting down the government. The White House is preparing for the worst and hoping for the best as it plans for the possibility of a government shutdown.

President Trump is pretty confident that the government would not shut down when current funding expires at midnight on April 28. “I think we’re in good shape” Trump told reporters in the Oval Office Friday.

All we can forecast this week is volatility because we expect to see a two-sided trade. There are just too many unknowns this week to make a reasonable guess on the direction of the gold prices.

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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