Price of Gold Fundamental Daily Forecast – Bullish Investors are Hoping GDP Misses to the Downside

Gold futures hit a five-week low on Thursday and is currently in a position to post a 1 percent loss for the week, pressured by a strong U.S. Dollar, high U.S. Treasury yields, expectations of higher inflation and the easing of geopolitical tensions.

June Comex Gold futures settled at $1317.90, down $4.90 or -0.37%.

Two catalysts played a role in generating the downside momentum. Traders said rising U.S. Treasury yields prompted bullish gold investors to aggressively unwind long positions. Additionally, gold was pressured by a steep drop in the Euro that was driven lower by a dovish tone in the European Central Bank’s Monetary Policy Statement. This helped drive the U.S. Dollar higher, making a gold a less-desirable investment.

This week, the benchmark 10-year U.S. Treasury yield breached the psychological 3-percent level, making the dollar a more attractive investment, boosted by a combination of worries about rising inflation and increased debt supplies as a result of President Donald Trump’s tax cuts and spending plans.

Additionally, diminished concerns over U.S.-China trade relations have encouraged investors to shift their focus to interest rate plays and out of safe-haven gold.

Forecast

Comex gold is trading slightly lower early Friday, shortly ahead of the New York opening and the release of the first quarter U.S. GDP report.

At 0900 GMT, June Comex Gold futures are trading $1317.80, down $0.01 or -0.01%.

Today’s early price action is likely to be determined by trader reaction to the GDP report. It is expected to show the U.S. economy grew 2.0%. This is lower than the previously reported 2.9%.

This report is important because U.S. Treasury investors will need it to justify this week’s rapid rise in yields.

This week, the benchmark 10-year U.S. Treasury yield climbed slightly above the psychological 3% level. If the GDP report comes in above the 2% estimate then yields could spike to the upside. This would drive the U.S. Dollar sharply higher and gold prices sharply lower.

If the GDP comes in below the 2% estimate then yields could drop, triggering a sell-off in the dollar and a short-covering rally in gold.

Traders are focused at this time on any numbers that could signal a shift higher in inflation, so employment costs and price data in GDP could be market movers if they surprise higher or lower. Employment costs are expected to rise 0.7 percent, compared with a 0.6 percent gain in the fourth quarter.

A report on consumer sentiment will also be released at 1400 GMT.