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Price of Gold Fundamental Daily Forecast – Lifting of Dollar Hedges Underpinning Gold Prices

By:
James Hyerczyk
Published: Sep 20, 2018, 12:17 UTC

Gold is currently sitting inside a major technical retracement zone bounded by $1205.90 to $1215.10. This zone is controlling the near-term direction of the market.

Comex Gold

Gold futures are trading higher on Thursday shortly before the regular session opening as the U.S. Dollar continues to weaken amid an easing of concerns over U.S.-China trade disputes. The unwinding of protective hedges is what’s driving the dollar lower. Gold is firming despite rising Treasury yields and expectations of a Fed rate hike at next week’s two-day central bank meeting.

At 1158 GMT, December Comex Gold is trading $1210.10, up $1.90 or +0.15%.

Forecast

Gold is currently sitting inside a major technical retracement zone bounded by $1205.90 to $1215.10. This zone is controlling the near-term direction of the market.

The current strength in gold is nice, but it’s being fueled by liquidation of hedges placed on the U.S. Dollar. In order to generate enough upside momentum for a prolonged rally in gold, we need to see the dollar weakening against the Euro as well as emerging market currencies. Until we see this shift in sentiment, gains are likely to be limited because of rising Treasury yields.

Later today, investors will get the chance to react a few minor economic reports, but most of the price action will be dictated by the movement in the U.S. Dollar.

At 1230 GMT, the Philly Fed Manufacturing Index is expected to come in at 17.5, up from 11.9. This would be a welcomed surprise since last month, the report reflected concerns over the U.S. trade disputes with certain global economies.

Weekly Unemployment Claims are forecast at 210K, up slightly from 204K. The low figure continues to reflect a robust labor market, which is one reason why the market expects to see a Fed rate hike next week.

At 1400 GMT, the CB Leading Index is expected to show a 0.5% increase, lower than the previously reported 0.6% gain. Existing Home Sales are expected to come in at 5.36M, up slightly from 5.34M. The housing number could prove to be interesting because mortgage rates have been rising also, curtailing demand in some areas of the country.

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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