Price of Gold Fundamental Daily Forecast – Could Post Higher Weekly Close Amid Global Growth Concerns

Gold futures are trading higher on Friday. Several factors are behind the move including lower demand for risky assets, a dip in U.S. Treasury yields and a weaker U.S. Dollar. Essentially, prices are rising due to gold’s appeal as a safe-haven asset. Position-squaring and short-covering ahead of today’s release of a report on U.S. Gross Domestic Product at 12:30 GMT is also underpinning prices.

At 09:05 GMT, June Comex gold futures are trading $1284.00, up $4.30 or +0.34%.

Lower Demand for Risky Assets

U.S. stock index futures were slightly lower Friday morning, as market participants prepared for another deluge of corporate earnings. On Thursday, the Dow fell 134.97 points to 26,462.08 as shares of 3M dropped 12.9% after the company reported earnings that were much lower than analysts had expected.

Treasury Yields Lower

U.S. government debt yields were lower Friday morning, as investors awaited key economic data. The yield on the benchmark 10-year Treasury note was lower at around 2.5234%, while the yield on the 30-year Treasury bond was higher at 2.9413%.

Dollar Down but Hovering Near Two-Year High

The U.S. Dollar Index was trading steady to lower early Friday, but remained close to the two-year high it reached on Thursday. On Thursday, the greenback was supported by data showing strong U.S. durable goods orders.

Position-Squaring and Short-Covering Supportive

Some of the early strength is being fueled by position-squaring and short-covering. We know this because the main trend is down and last week, the Commodity Futures Trading Commission reported that traders had turned net short. In order to generate a strong rally, these shorts have to be taken out first.

Daily Forecast

Gold is currently in a position to post its first weekly gain in five even with the U.S. Dollar sitting just under a two-year high. This may actually be capping gains ahead of today’s Gross Domestic Product (GDP) report, due at 12:30 GMT.

According to a Reuters survey of economists, the data will probably show GDP increased 2.0 percent year-on-year in the first quarter, slightly slower than the 2.2 percent posted in the previous quarter.

However, the closely-watched projection of gross domestic product (GDP) from the Atlanta Federal Reserve is expecting an outcome of 2.7%, a massive turnaround from a few weeks ago when it stood at 0.5%.

Gold futures could weaken if the GDP figures show the U.S. economy outperforming the rest of the developed world. Prices could strengthen, however, if traders determine that global economic risks are outweighing U.S. economic strength.