Price of Gold Fundamental Daily Forecast – Gains Capped by Early Concerns Over Next Week’s Fed Meeting

Gold futures are edging higher on Friday, supported by a weaker U.S. Dollar and U.S. Treasury yields. This puts the market in a position to post its third straight weekly gain. Nonetheless, volume is relatively light as investors begin to position themselves ahead of next week’s U.S. Federal Reserve meeting.

At 11:19 GMT, June Comex gold futures are trading $1786.70, up $4.70 or +0.26%.

The Fed’s next meeting ends on April 28, and while no major policy changes are expected, investors are paying close attention to any comments on possible scaling back of monetary easing in the future.

Treasury Yields Mixed

U.S. Treasury yields are posting a mixed performance on Friday morning, with investor focus on President Joe Biden’s capital gains tax proposal and the release U.S. Flash Manufacturing and Services PMI data later this morning.

The yield on the benchmark 10-year Treasury note rose to 1.558% at 08:50 GMT. The yield on the 30-year Treasury bond climbed to 2.245%.

Yields made small movements in both directions on Friday morning, following reports that Biden will seek to raise taxes on millionaire investors to fund education and other spending priorities.

Biden will seek an increase in the tax on capital gains to 39.6% from 20% for those Americans earning more than $1 million, according to multiple outlets, including Bloomberg News and The New York Times.

US Dollar Stuck in Narrow Range

The U.S. Dollar is pinned inside a narrow range near multi-week lows on Friday, as markets look to the next moves by major central banks ahead of a U.S. Federal Reserve meeting next week.

Earlier today, the U.S. Dollar Index fell as the Euro rose in response to flash purchasing managers’ index numbers for April that came in better than expected in the Euro Zone and supported the view that the region’s economic recovery is accelerating.

Daily Forecast

Later today at 13:45 GMT, traders will have the opportunity to react to the latest Flash Manufacturing PMI and Flash Services PMI data. They are expected to come in at 60.9 and 61.6 respectively. Both are expected to confirm that the U.S. economic recovery is accelerating.

New Home Sales, due out at 14:00 GMT, are expected to show an 885K unit gain, up from 775K.

With the focus turning to the Fed, gold speculators are raising concerns that central bank policymakers might signal its intention to reduce its emergency stimulus measures in the coming months. This is not the same as an interest rate hike, but it is a form of tightening that could be bearish for gold prices.

For a look at all of today’s economic events, check out our economic calendar.