Price of Gold Fundamental Daily Forecast – Feeling Some Pressure from Strong Risk Sentiment

Gold futures are trading lower on Thursday, weighed down by a rebound in Treasury yields and strong demand for higher risk assets like equities. Despite worries over rising inflation and a surge in coronavirus cases, demand for gold has been under pressure all week because ultimately, it all comes down to yield, and gold doesn’t pay interest or a divided.

At 09:24 GMT, August Comex gold is trading $1801.50, down $5.90 or -0.33%.

Gold traders are also monitoring the movement in the U.S. Dollar. Here’s where it gets tricky. The dollar has been supported lately by safe-haven buying. This has kept a lid on gold prices. On Thursday, the dollar broke sharply because fresh demand for risky assets meant investors didn’t have to hold the dollar for protection.

Although the dollar weakened on Wednesday, dollar-denominated gold didn’t rally because appetite for risk was rising in the stock market and gold isn’t that of an attractive asset when yield and return on investment are the main goals.

The dollar is also sometimes supported by the notion that the Fed will soon begin tapering its bond buying stimulus. This may be another reason why investors aren’t buying gold despite a drop in Treasury yields earlier this week to its lowest level since February.

Treasury Yields Fall Slightly Ahead of Jobless Claims Data

U.S. Treasury yields fell slightly on Thursday morning, ahead of the release of weekly jobless claims data. The yield on the benchmark 10-year Treasury Note dipped less than 1 basis point to 1.275%. The yield on the 30-year Treasury bond fell less than a basis point to 1.924%.

Economic data could move yields today, which may affect the price action in the gold market. The U.S. Department of Labor is due to release the number of jobless claims filed last week at 12:30 GMT. Economists polled by Dow Jones are expecting the number of first-time filings to be 350,000 for the week ended July 17, down from the prior reading of 360,000.

Existing home sales data for the U.S. in June is due to come out at 14:00 GMT.

Stock Futures Rise after Major Averages Turn Positive for the Week

U.S. stock index futures were slightly higher in early morning trading on Thursday, after the major averages advanced during regular trading to turn positive for the week.

Daily Forecast

Gold futures could extend their earlier losses if Treasury yields continue to rise and the major stock indexes build on Tuesday’s strong rally.

Earlier in the week, gold futures rose as the Dow dropped more than 700 points as rising COVID cases worldwide hit sentiment. Meanwhile the yield on the 10-year Treasury dipped to a five-month low of 1.17% at the beginning of the week, which also caused investors to dump equities.

Since then, stocks have turned higher for the week and yields have climbed back to 1.29%. At the same time, gold prices have retreated to their lowest level since July 12.