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Price of Gold Fundamental Daily Forecast – Investors Finally Showing Some Reaction to Geopolitical Events

By:
James Hyerczyk
Published: Jun 22, 2018, 08:11 UTC

The biggest influences on the gold market today will be any fresh tariff threats from the U.S. or China, U.S. economic data and the outcome of the OPEC meeting in Vienna. Keep an eye on the Treasury yields. If they continue to fall then gold could attract bids.

Comex Gold

Gold futures are actually showing signs of life after hitting their lowest level since December 13 on Thursday. The price action actually suggests the first real reaction to geopolitical tensions in weeks.

Helping to trigger the short-covering rally in gold was the massive sell-off in the U.S. Dollar, which tumbled from a 11-month high on a combination of profit-taking and position-squaring amid rising tensions over US-China trade relations and weaker-than-expected U.S. manufacturing data.

The gold/US-China trade relationship has been volatile all week after President Trump requested the United States Trade Representative to identify $200 billion worth of Chinese goods late Monday, for additional tariffs at a rate of 10 percent.

Trump’s request for additional tariffs follows aggressive moves by both economic powerhouses last week. Beijing again reacted to Trump’s statement by pledging to retaliate with additional tariffs on U.S. goods of their own.

For weeks, gold traders have ignored its traditional relationship with geopolitical events with most of the money flowing into the U.S. Dollar. Thursday’s price action suggested a possible return to this relationship, at least over the short-run.

Gold came off its low and the dollar off its high on Thursday after the Philadelphia Federal Reserve’s gauge of U.S. Mid-Atlantic business activity fell to near a 1 ½ year low.

The Philly Fed report said business activity fell from 34.4 in May to 19.9 in June, its lowest since November 2016. The index’s sharpest drop since January. Some traders said the Philly Fed miss to the downside was a convenient excuse for dollar bulls and gold bears to book profits after nearing key technical areas on the charts.

Forecast

Gold is trading nearly flat after a slight follow-through to the upside early Friday. At 0806 GMT, August Comex gold is trading $1270.30, down $0.20 or -0.02%.

Most traders are watching U.S. Treasury yields and the global stock indexes. The stories that traders are paying the most attention to are renewed trade concerns, U.S. PMI data and the outcome of the OPEC meeting.

The major reports from the U.S. that should move the markets on Friday are Final Manufacturing PMI and Flash Services PMI, due to be released at 1345 GMT.

Final Manufacturing PMI is expected to come in at 56.3, slightly below the previously reported 56.4. Flash Services PMI is forecast at 56.4, down from the previously reported 56.8.

The biggest influences on the gold market today will be any fresh tariff threats from the U.S. or China, U.S. economic data and the outcome of the OPEC meeting in Vienna. Keep an eye on the Treasury yields. If they continue to fall then gold could attract bids.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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