Price of Gold Fundamental Daily Forecast – Could See Position-Squaring Ahead of Tuesday’s CPI Report

Gold is trading slightly lower early Monday. There was no follow-through to the upside following Friday’s late rally. Volume is low as investors prepare for a week of major economic reports including consumer inflation, producer inflation, retail sales and building permits.

At 0714 GMT, April Comex Gold futures are trading $1322.70, down $1.20 or -0.09%.

Despite Friday’s late surge, the market is feeling some pressure today due to a continued reaction to Friday’s stronger-than-expected non-farm payrolls number. The headline number rose by 313,000 jobs last month, boosted by the largest rise in construction jobs since 2007, the Labor Department said.

Average hourly earnings edged up four cents, or 0.1 percent, to $26.75 in February, a slowdown from the 0.3 percent rise in January. That lowered the year-on-year increase in average hourly earnings to 2.6 percent from 2.8 percent in January.

In other news, speculators raised their net long position in gold by 4,178 contracts to 161,812 contracts, Commodity Futures Trading Commission (CFTC) data showed.

Forecast

Today is a light report day, highlighted by a 10-year Bond Auction and Federal Budget Balance report. This could help reign in prices today unless the dollar makes a volatile move. Rising stock prices could put some pressure on gold.

The primary focus for gold traders this week will be Tuesday’s U.S. Consumer Inflation report. It is expected to show an increase of 0.2%, well below last month’s 0.5% increase.

With average hourly earnings coming in below expectations, weaker CPI data could encourage the Fed to stick with its forecast for three rate hikes this year. With stronger CPI data, there could still be a chance for as many as four rate hikes.

The CPI data will drive the direction of the U.S. Dollar, and the dollar will drive the gold market.