Price of Gold Fundamental Daily Forecast – Even With Central Banks Turning Dovish, Gold Can’t Seem to Attract BuyersPerhaps it’s the uncertainty over whether conditions are right for a global recession that is chasing speculators out of gold. If that’s the case then you have to believe that a failure by the U.S. and China to reach a trade deal may be the only way we’ll see any appreciation in gold prices over the near-term.
Gold is trading lower on Tuesday, pressured by a surge in the U.S. Dollar against a basket of major currencies. As the dollar climbs toward its high for the year at 97.16, gold is trading lower for the year and testing a key support level at $1287.50. The problem is gold can’t find a buyer. Furthermore, all that talk about gold being the place to put money during economic turmoil seems to be just marketing material for the brokers trying to drum up demand.
At 09:45 GMT, June Comex gold is trading $1291.00, down $3.20 or -0.25%.
Gold doesn’t have an identity at this time and that’s a problem for bullish traders. Despite the Fed turning dovish, U.S. interest rates are just high enough to be attractive to foreign buyers, making the dollar a more attractive asset. Furthermore, during times of economic upheaval, investors have been turning to the dollar for protection. So gold at this time is not in demand because it is neither an investment nor a safe-haven asset.
Another problem for gold traders is the bull market in palladium. Money managers, looking for a place to invest have taken a liking to palladium because it has a solid fundamental story, it moves and it has just enough liquidity to allow investors to escape if their wrong on a trade, but still allow bullish traders with enough money to control the upside. Gold tends to move sluggishly with a periodic spurt thrown in for good measure. Furthermore, given the two-side nature of the U.S. Dollar – acting as both investment and safe-haven asset – traders are having a hard time picking up on the trend in gold.
If the low of the year is value then gold is sitting right on top of support. However, turning lower for the year and threatening to take out its low for the year at a time when all the major central banks have turned dovish and at least two are considering cutting rates, one has to wonder what it is going to take to drum up interest in the long side of gold.
Perhaps it’s the uncertainty over whether conditions are right for a global recession that is chasing speculators out of gold. If that’s the case then you have to believe that a failure by the U.S. and China to reach a trade deal may be the only way we’ll see any appreciation in gold prices over the near-term.