Price of Gold Fundamental Daily Forecast – Gold Firms on Falling Yields; Gains Capped by Strong Dollar

Gold futures are trading marginally higher on Thursday, but still inside Tuesday’s wide range. The market is being underpinned by falling U.S. Treasury yields and lower demand for higher risk assets. However, a stronger U.S. Dollar may be helping to limit gains.

Gold rebounded from early session weakness after China said it would have to take counter-measures in response to the announcement of additional duties on $300 billion of Chinese exports, starting on September 1.

At 18:44 GMT, December Comex gold futures are trading $1533.00, up $5.20 or +0.34%.

Prices sat in a range earlier in the session as investors digested mixed U.S. economic data. Retail Sales, Core Retail Sales, the Philly Fed Manufacturing Index and the Empire State Manufacturing Index all beat their forecasts. Weekly jobless claims, Capacity Utilization and Industrial Production were all worse than expected.

Gold is starting to climb late in the session as investors continue to pile into the safety of the U.S. government bonds, sending the 30-year Treasury bond yield below 2% for the first time ever and the 10-year Treasury note yield to below 1.5%, a three-year low.

The volatility on Thursday is being headline driven, but ultimately, the direction into the close will be determined by the direction of Treasury yields, demand for risk and the strength of the U.S. Dollar.

Shortly before the close, yields are falling, risky assets are trading in two directions and the dollar is firm. This is helping to underpin gold, but at the same time hold it inside Tuesday’s wide range.