Price of Gold Fundamental Daily Forecast – Buyers Have Been Resilient This Week

Gold futures are treading water early Friday as investors position themselves ahead of today’s U.S. Non-Farm Payrolls report, due to be released at 1230 GMT.

The market has been pretty resilient this week despite a surge in U.S. Treasury yields and a spike to the upside by the U.S. Dollar. This suggests a possibly decoupling between gold and these traditional assets. Perhaps speculators are betting that the Fed will lose control of inflation if the economy continues to heat up.

At 0758 GMT, December Comex Gold futures are trading $1202.70, up $1.10 or +0.11%.

Gold buyers have been good at protecting the downside this week, but they’ve had a little trouble with the upside. This is understandable, however, because in order to move higher, the short-sellers have to be cleared out of the market first. This could be taking place at this time, but we can’t be certain until the buyers drive gold prices through the series of tops at $1215.80, $1218.00 and $1220.70.

Forecast

Going into today’s non-farm payrolls report, investors are likely to be cautious especially after U.S. Treasury yields hit multi-year peaks on Thursday. Higher rates tend to make the U.S. Dollar a more attractive investment. This usually pressures gold because it is a dollar-denominated asset.

Furthermore, there is usually little interest in the long-side of zero-yielding gold when rates are rising as rapidly as they are at this time.

However, this week looks a little different because gold has been holding steady around the $1200.00 level.

The rules say we should be selling gold if the non-farm payrolls report comes out bullish. This is because it should raise expectations of further rate hikes by the Fed. However, if buyers continue to hold the market above $1200.00, then I wouldn’t be surprised by a breakout to the upside.