Price of Gold Fundamental Daily Forecast – Early Price Action Suggests Powell Will Be Dovish

Gold prices rose considerably early Monday before giving back most of those gains to finish only slightly better. The market was helped early in the session as a softer U.S. Dollar helped the precious metal rebound from its biggest weekly loss this year.

April Comex Gold futures settled at $1332.80, up $2.50 or +0.19%.

Increased demand for higher-risk assets also helped push gold down from its early highs. This may have been a sign that investors are betting Powell will highlight an intention to steer a steady course on U.S. monetary policy when he addresses lawmakers on Tuesday and Thursday.

In other news, the Commerce Department said new home sales dropped 7.8 percent to a seasonally adjusted annual rate of 593,000 units last month, the lowest level since August 2017. Economists polled by Reuters had forecast new home sales, which account for nearly 10 percent of the housing market, rising to a pace of 645,000 units last month.

Forecast

Newly appointed Fed Chair Jerome Powell will testify on the central bank’s semi-annual report on monetary policy and the economy on Tuesday, before the U.S. House of Representatives’ Financial Services Committee. Powell’s first congressional testimony comes at a time when investors are concerned over the pace of U.S. monetary tightening after years of stimulus.

Powell is expected to sound optimistic about the economy, but is likely to ask investors to be patient in assessing whether inflation will head higher this year.

A hawkish testimony is likely to be supportive for the U.S. Dollar which could drive gold prices lower. The sell-off could be limited by weakness in U.S. equity markets, however. A dovish testimony could weaken the dollar which would make gold a more attractive investment.

Traders will also get the opportunity to react to a number of U.S. reports which could have an impact on the dollar and consequently gold prices.

At 1330 GMT, the U.S. will release its latest data on Core Durable Goods Orders. It is expected to come in at 0.4%, below the previous 0.7%. Durable Goods Orders are expected to come in at -2.4, well-below the 2.8% previously reported.

The U.S. Goods Trade Balance is expected to come in unchanged at -72.3 Billion. Preliminary Wholesale Inventories are expected to rise 0.3%.

The HPI is forecast at 0.4% and the S&P/CS Composite-20 HPI is expected to come in up 6.3%, down slightly from the previous 6.4%.

Conference Board Consumer Confidence is expected to come in at 126.2, slightly above the previously reported 125.4. The Richmond Manufacturing Index is estimated at 15.