Price of Gold Fundamental Daily Forecast – Fed Speakers, Monetary Policy Report Could Fuel Volatile Response

A weaker U.S. Dollar and position-squaring ahead of a series of Fed speakers is helping to hold gold prices steady on Friday. Despite yesterday’s solid rally and today’s firm tone, the market is still expected to finish the week with its worst performance in 2 ½ months.

At 1234 GMT, April Comex Gold is trading $1332.50, down $0.20 or -0.01%.

Traders remain somewhat cautious on gold over the short-term given this week’s strength in the dollar, especially in the light of U.S. Treasury yields remaining elevated.

Interest rates and the dollar are likely to remain the key factors driving the price action in gold. At this time, geopolitical events are taking a backseat.

On Thursday, St. Louis Fed President James Bullard tried to tamp down expectations of four rate hikes in 2018. Instead of the widely anticipated three increases, Bullard said policymakers need to be careful not to increase rates too quickly because that could slow the economy.

Gold has fluctuated in two directions this month as investors fretted about how fast the Fed might raise rates after official data showed a pick-up in U.S. inflation.

Basically, fears of inflation boost gold, which is perceived as a safe haven against rising prices. But hikes in interest rates to fight inflation make gold less attractive since it is not an interest-yielding investment.

Forecast

Gold is currently in a downtrend according to the daily chart. A trade through $1322.90 will indicate the selling is getting stronger. The short-term range is $1309.00 to $1364.40. Its 50% or pivot level is $1336.70. Look for a bullish tone to develop on a sustained move over this level. It’s 61.8% level is $1330.20. Prices could weaken under this level.

A series of Fed speakers could dictate the direction of the gold market today. At 1515 GMT, FOMC Member William Dudley is scheduled to speak. FOMC Member Loretta Mester is scheduled for 1830 GMT, and FOMC Member John C. Williams for 2040 GMT.

Traders are hoping the Fed speakers provide some insight into the number of rate hikes to expect from the central bank this year.

At 1600 GMT, the Fed Monetary Policy Report will be released. A hawkish tone could be bearish for gold futures.