Gold is trading lower early Monday. The U.S. Dollar is trading flat against a basket of major currencies so the pressure may be coming from an external event like signs of easing tensions on the Korean peninsula, which is helping to reduce safe-haven demand for gold.
At 0744 GMT, June Comex Gold futures are trading $1318.10, down $5.30 or -0.40%.
Price action could be limited today due to holidays in Japan, China and India. Additionally, much of Asia will be closed on Tuesday.
In other news, hedge funds and money managers trimmed their net long position in COMEX gold contracts and switched to a net long position in silver contracts in the week to April 24, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.
Forecast
The trend is down according to technical analysis so we have a bias to the downside. This is being supported fundamentally by the firmer U.S. Dollar, rising interest rates and the easing of geopolitical tensions.
If short-sellers decide to take advantage of today’s thin trading conditions then we could see selling pressure that extends into a $1312.40 to $1309.30.
The market is not in a position to change the trend to up, but there is room for a meaningful short-covering rally. However, this move would have to be fueled by a surprise event.
While the agreement between North Korea and South Korea to work towards “denuclearization” of the Korean peninsula is making the headlines at this time, traders may start to show some response to the upcoming meeting between President Trump and Kim Jong Un in May.
Additionally, a delegation of U.S. officials, including Treasury Secretary Steven Mnuchin and President Donald Trump’s top economic and trade advisers are all expected in China later this week for trade negotiations.
In other news, traders will get a chance to respond to minor reports on U.S. Personal Income and Pending Home Sales. However, the price action may be muted because the thin holiday trade and ahead of Wednesday’s Fed interest rate and monetary policy decision.