Price of Gold Fundamental Daily Forecast – Gold Traders Being Patient While Yields, Stocks, Dollar Search for DirectionLook for gold prices to pick up strength if the dollar, yields and stocks all weaken. If they all rise then sellers are likely to pressure gold prices. Gold is holding steady at 11:45 GMT, but should make a move once the key indicator line up in one direction. If they remain mixed, then look for the sideways trade to continue.
Gold futures are trading nearly flat on Monday, mirroring the price action by the Euro and U.S. Dollar Index. A reversal to the downside by U.S. Treasury yields and a drop in demand for higher risk assets is also providing support for the dollar-denominated asset.
Earlier in the trading session, gold reached its lowest level in two weeks, stopping at $1273.30, slightly above the major 50% level at $1272.70. After three days of intense selling pressure, the market could now be setting up for a minor reversal to the upside.
At 11:45 GMT, June Comex gold futures are trading $1275.60, down $0.10 or -0.01%.
We’re not going to look at gold as a safe-haven asset, but rather an investment today. The key components driving the price action will be the direction of Treasury yields, the value of the U.S. Dollar and demand for higher risk assets like U.S. stocks.
We know the value of the U.S. Dollar dictates the biggest influence on gold prices because it is a dollar-denominated asset. When the dollar weakens, foreign demand for gold tend to increase, driving prices higher.
Lately, the direction of gold has not only been driven by the direction of the dollar, but also by the direction of Treasury yields and equities. This is because the greenback is being influenced by yields and safe-haven demand.
Look for gold prices to pick up strength if the dollar, yields and stocks all weaken. If they all rise then sellers are likely to pressure gold prices.
Earlier in the session, U.S. Treasury yields were underpinned by position-squaring ahead of a series of speeches from Fed policymakers including Fed Chair Jerome Powell, Philadelphia Fed President Patrick Harker and Vice Chair Richard Clarida.
Powell speaks at 23:00 GMT on risks to the financial system. Clarida and Williams will take part in a “Fed listens” event in New York. Over the week-end, Federal Reserve Bank of Dallas President Robert Kaplan said that trade tensions might have a chilling effect on the U.S. and global economy.
Additionally, U.S. stock index futures fell on Monday ahead of the cash market opening as concerns about an intensifying fallout from a U.S. crackdown on Huawei weighed on market sentiment.
Gold is holding steady at 11:45 GMT, but should make a move once the key indicator line up in one direction. If they remain mixed, then look for the sideways trade to continue.