Price of Gold Fundamental Daily Forecast – GDP Number Over 4.1 Percent Could Crush Gold Prices

Gold futures are trading lower in a limited range early Friday as investors prepare for today’s U.S. second-quarter Gross Domestic Product report due to be released at 1230 GMT. Economists are calling for the report to show the economy grew by 4.0%, up from 2.0%.

At 0803 GMT, December Comex Gold futures are trading $1233.00, down $2.30 or -0.19%. The market is also in a position to post its third consecutive weekly loss. Currently, it is down about 1.00 percent for the week.

Gold was pressured on Thursday following the release of the U.S. Durable Goods report which increased more than expected in June.

Dollar-denominated gold was also pressured by a stronger U.S. Dollar. The Greenback was mostly supported by a weaker Euro which tumbled after the European Central Bank offered little in the way of surprises over its planned timing to move away from its accommodative monetary policy.

Forecast

Despite being in a position to finish lower this week, gold has essentially been consolidating inside the $1221.00 to $1244.70 trading range. The mid-point of this range is $1232.90. From a technical perspective, the direction of the gold market today is likely to be determined by trader reaction to $1232.90.

The trend is down so a move through $1221.00 will signal a resumption of the downtrend. A trade through $1244.70 will not change the main trend to up, but it will change the minor trend to up while at the same time shifting momentum to the upside.

Remember also that according to government trading data, money managers are now net short. At this point, they can either continue to build a short position, or aggressive counter-trend buyers could step in. However, there is going to have to be a major shift in U.S. interest rates, the Dollar and demand for risky assets in order at attract enough buyers to change sentiment.

Today’s GDP report, due to be released at 1230 GMT, should move the market because it will influence interest rates and the U.S. Dollar.

Economists expect the economy grew by 4.0 percent in the second quarter, its best pace in nearly four years, thanks to a stronger consumer and surprise narrowing of the trade deficit.

The range of guesses is 2.5 percent to 5 percent. Barclays says the tracking number for second quarter GDP is a whopping 5.2 percent.

Anything north of 4.1 percent could drive the U.S. Dollar higher, crushing gold prices.