Price of Gold Fundamental Daily Forecast – Could Spike Higher if Traders Continue to Shed Safe-Haven Dollar

Gold futures are trading steady but lower on Monday despite signs of increased appetite for risk and rising Treasury yields, two factors that typically put pressure on gold prices. The prices action suggests that perhaps last week’s steep sell-off was overdone. Additionally, the market is trading inside Friday’s price range which suggests investor indecision and impending volatility.

At 10:05 GMT, June Comex gold is trading $1295.50, down $3.00 or -0.23%.

The catalyst behind the early weakness is upbeat Chinese economic data and optimism over the progress of U.S.-China trade talks which dampened concerns about slower economic growth while putting demand for riskier assets.

Stronger global equity markets and a recovery in Treasury yields after last week’s steep drop are weighing on demand for gold, but a weaker U.S. Dollar may be preventing dollar-denominated gold from weakening further.

Due to the good news from China, investors are shedding safe-haven U.S. Dollar positions placed as a hedge against economic turmoil and global economic uncertainty. Today’s price action suggests investors are softening those fears.

In other news, speculators increased net long positions in COMEX gold for the second straight week to March 26, according to data from the Commodity Futures Trading Commission.

Daily Forecast

Last week’s trade and today’s early action suggests that gold investors are defending the low for the year at $1287.50. This is a very important support level because it represents nearly 50% of its rally from November 2018 to February 2019.

It’s hard for bearish investors to dump gold at current levels because the dovish central banks suggest interest rates are not likely to rise and could move lower. Both moves are usually supportive for gold, however, safe-haven demand is making the U.S. Dollar stronger and this is weighing on demand for dollar-denominated gold.

It may take time today, but if the dollar weakens substantially, look for a spike higher in gold. Today’s U.S. reports on Retail Sales and ISM Manufacturing today could determine if gold move sharply higher or sharply lower.