Price of Gold Fundamental Daily Forecast – Focus on Gold’s Relationship with the Dollar Today

Gold is inching higher early Monday amid a softer U.S. Dollar and the lack of follow-through to the downside after Friday’s selling pressure drove the market to its lowest level in seven months. It’s too early to tell was is motivating today’s price action, but I suspect it’s partly related to traders’ refusal to the start the week by selling weakness without a major catalyst behind the trade.

At 0503 GMT, August Comex Gold futures are trading $1244.30, up $3.20 or +0.26%.

Last week, the stronger U.S. Dollar and increased demand for risky assets helped drive gold prices lower. Two catalysts behind the stronger dollar were robust U.S. producer and consumer inflation report, which solidified the chances of at least two more Fed rate hikes before the end of the year. The dollar did reverse to the downside on Friday after a consumer confidence report missed the forecast.

Also on Friday, the U.S. Federal Reserve pointed to “solid” U.S. economic growth during the first half of the year in its semi-annual report to Congress, where it also reiterated that it expected to continue to raise interest rates gradually.

In other news, hedge funds and money managers cut their net long position in COMEX gold contracts to a 2-1/2 year low in the week to July 10, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.

Forecast

I’m going to continue to use the relationship between the U.S. Dollar and August Comex Gold for my trading decisions this week. I’ll be watching and reacting to the direction of yields and the stock market also. I’m not going to be monitoring the meeting between U.S. President Trump and Russia President Putin. If anything important comes out of the meeting then I’m certain it will be reflected in the U.S. Dollar.

The same goes for any post-Brexit trade deal between the U.S. and the U.K. Additionally, the European Union’s annual meeting with China will be pretty much shrugged off until the outcome moves the dollar.

If you’re serious about trading the gold market at this time, you have to block out the noise and focus on the price action of the markets that matter.

Here’s what can influence the dollar, interest rates and the stock market today. At 1230 GMT, the U.S. is scheduled to release reports on Core Retail Sales, Retail Sales and Empire State Manufacturing Index. At 1400 GMT, look for a report on Business Inventories.

Core Retail Sales are expected to rise 0.4%, down from 0.9%. Retail Sales are estimated at 0.4%, down from 0.8%. The Empire State Manufacturing Index is expected to come in at 20.3, down from 25.0. Business Inventories are expected to increase 0.4%, up from 0.3%.

Stronger-than-expected retail sales data should be supportive for the U.S. Dollar.

Trading could be light on Monday and Tuesday ahead of Fed Chair Jerome Powell’s testimony before Congress on Wednesday and Thursday.