Price of Gold Fundamental Daily Forecast – Gold Weakens as Dollar Rises after Brexit Resignation

Gold is trading slightly better on Thursday shortly before the regular session opening, but retreating from its intraday high. The price action is being controlled by the direction of the U.S. Index and the greenback is being manipulated by the Euro. Treasury yields are dipping and stocks are trading flat.

At 1015 GMT, December Comex Gold futures are trading $1211.10, up $1.00 or +0.09%.

The Euro is plunging in reaction to the breaking news that U.K. Brexit Secretary Dominic Raab resigned  from his post, dumping more pressure on U.K. Prime Minister Theresa May and casting doubts about the proposed Brexit deal.

According to reports, Raab said in a letter that he could not reconcile with the terms of her proposed Brexit deal, after the promises the ruling Conservative Party made to the country in an election manifesto last year.

“I regret to say that, following the Cabinet meeting yesterday on the Brexit deal, I must resign. I understand why you have chosen to pursue the deal with the EU on the terms proposed, and I respect the different views held in good faith by all of our colleagues,” Raab said in his letter to May.

“For my part, I cannot support the deal for two reasons,” Raab said. “First, I believe that the regulatory regime proposed for Northern Ireland presents a very real threat to the integrity of the United Kingdom.”

“Secondly,” he added, “I cannot support an indefinite backstop arrangement, where the EU holds a veto over our ability to exit.”

Forecast

Based on the early price action, the direction of the Euro is likely to control the movement in gold. If the Euro continues to weaken on the Brexit news then look for the dollar index to rally. This should put pressure on dollar-denominated gold.

Gold will rally if the Euro stabilizes.

Later today, investors will get the opportunity to react to a slew of U.S. economic reports including Retail Sales, Core Retail Sales, the Philadelphia Fed Manufacturing Index and the Empire State Manufacturing Index.

Additionally, a report will be released on Import Prices and Weekly Unemployment Claims.

FOMC Member Quarles and Bostic are also scheduled to speak. Most importantly, Fed Chair Jerome Powell is scheduled to speak at 1630 GMT.

Earlier today, Powell said the economy “is in such a good place right now” and credited monetary policy for helping to engineer that growth.