Price of Gold Fundamental Daily Forecast – Investors Waiting for Bargain Prices as Restrictions Ease

Gold prices traded flat to higher most of the session on Thursday before succumbing to selling pressure late in the day. The price action suggests there was a ‘stopper” in the market preventing a rally, and that frustrated longs just “threw in the towel” late in the session, triggering a steep decline into the close.

On Thursday, June Comex gold settled at $1694.20, down $19.20 or -1.12%.

Despite the late liquidation of long positions, gold managed to post its best monthly performance since August 2019 on massive amounts of fiscal and monetary stimulus intended to ease the stress on the global economy caused by the coronavirus outbreak.

Loosening of Restrictions Dampens Concerns Over Prolonged Global Recession

Traders said concerns about the virus seem to be receding a little at a time when more countries are opening up and loosening restrictions. Furthermore, some saw little so-called “safe-haven” buying this week.

Reuters reported that Prime Minister Boris Johnson said Britain was now past the peak of its coronavirus outbreak and promised to set out a lockdown exit strategy next week, joining other economies like the United State, New Zealand and Australia gradually easing restrictions.

On the bearish side of the equation on Thursday, traders said the Fed’s decision on Wednesday to keep interest rates near zero and promise to expand emergency programs as needed to help the battered economy, probably weighed on investor sentiment. Bullish investors were hoping for a stronger commitment of more aid from the Fed. When they didn’t see it in the monetary policy statement, they began to exit long speculative positions.

Daily Forecast

Prices are likely to edge lower over the short-run because gold investors are going to give the market a little more breathing room as more economies begin to open up. This suggests that traders are going to let the market move lower toward value areas before they start buying again. Over the short-run, we’re not likely to see bullish investors chasing prices higher. Instead, they are going to be ready when the market hits a value area.

Gold bulls shouldn’t give up on the long side of the market just yet because we don’t know if a second wave of coronavirus cases is just around the corner.

A break into a value area combined with renewed lockdown restrictions would be a major opportunity to play the long side once again.