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Price of Gold Fundamental Daily Forecast – Despite Early Weakness, Market Remains Well Supported

By:
James Hyerczyk
Published: Mar 27, 2020, 10:31 UTC

Quantitative easing from the Fed, the current fiscal stimulus and expectations of additional stimulus measures to counteract soaring unemployment are expected to continue to underpin gold prices.

Price of Gold Fundamental Daily Forecast – Despite Early Weakness, Market Remains Well Supported

Gold futures are edging lower on Friday as investors booked profits ahead of the weekend and following a huge surge earlier in the week that stopped just short of the year’s high at $1707.80. The market is also set for its best week since December 2008 as record high U.S. jobless claims due to the coronavirus pandemic fueled hopes for more fiscal stimulus to stem the economic damage caused by the epidemic.

At 10:09 GMT, June Comex gold is trading $1643.10, down $17.20 or -1.04%.

Bullion is up about 8% so far this week, supported early in the week by the Federal Reserve’s unprecedented economic stimulus measures and Thursday’s weak U.S. unemployment data.

The Fed essentially flooded the market with U.S. Dollars when it expanded its balance sheet by more than half a trillion dollars in a single week, roughly twice the pace of the next-largest weekly expansion during the 2008 financial crisis. The aggressive action drove the U.S. Dollar higher, thereby driving up foreign demand for dollar-denominated gold.

Additional measures that could put more dollars into the system include the estimated $2.2 trillion virus relief bill and a pledge by leaders of the Group of 20 major economies to inject money into the global economy.

Later today, the U.S. House of Representatives is expected to pass a bill loaded with stimulus measures to combat the pandemic after U.S. unemployment fillings surged to a record 3.28 million the week-ending March 20.

The Group of 20 pledged to inject more than $5 trillion into the global economy to limit job and income losses.

Some gold traders are still eyeing physical supply issues after the virus-led lockdowns stalled supply chains and threatened London gold deliveries to Chicago’s CME Group.

Daily Forecast

There isn’t a compelling reason to short gold at this time, but taking profits or allowing the market to reset support at a lower level is understandable. Quantitative easing from the Fed, the current fiscal stimulus and expectations of additional stimulus measures to counteract soaring unemployment are expected to continue to underpin gold prices.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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