Price of Gold Fundamental Daily Forecast – Losing Ground to Competition from Stocks, Bonds, Cryptocurrencies

Gold futures are edging lower shortly after the regular session opening in New York on Wednesday. The market is currently testing its lowest level in over two months as surging U.S. Treasury yields and a firmer U.S. Dollar continued to drive down foreign demand for the non-yielding, dollar-denominated asset. Investment capital that usually flows into gold for safe-keeping is now moving into bitcoin on expectations of protection and practical use. (When was the last time you tried to pay for something with a gold bar?)

At 13:17 GMT, April Comex gold futures are trading $1785.10, down $13.90 or -0.77%.

Safe-Haven What?

A massive amount of liquidity is sending a message of safety to the investor, furthermore, economies are moving out of lockdowns and there is a sense that the world is moving closer to normal levels. Traders are also more optimistic about the global economic recovery that is producing little interest in the so called “safe-haven” feature of gold.

If you haven’t noticed, gold topped out on August 7, 2020. Since then the dollar has plunged, central banks kept buying bonds, governments provided more liquidity and coronavirus cases and deaths continued to rise. And what has gold done?

Today, it is trading below 50% of its 2020 price range. That is a sign of weakness, not strength. It may be a value area to some if you compare it to last year’s April Comex gold low at $1467.00 and a bargain to those who have dreams of the precious metal returning to its $2107.60 August 2020 top, but what is going to be the catalyst to drive it higher from here?

Last year, it was an out of control pandemic and the major central bank’s driving rates to zero or below in uniform fashion that send gold soaring over $600 an ounce in just five months. It make take such an event to repeat the move this year. Instead, investors are now trying to ease out of their long positions and put their money to work elsewhere.

Just like the central banks are going to have to figure out a way to exit their bond buying strategy, gold buyers are trying to figure out how to ease out of the precious metal without crashing prices. Prices are likely to fall until they hit a value area.

They tried to find value at $1787.30, the 50% level of last year’s range, but that looks like it’s failing as Treasury yields rise and money moves toward real investments that pay dividends or interest. If $1787.30 fails then look for the selling to possibly extend into $1711.70, the next potential value level.

Gold did its job during the start of the crisis. It provided investors a place to park some of their cash, but that strategy can’t last forever with the global economy recovering at a faster than expected pace and other investments like Bitcoin and Treasurys looking more attractive.

For a look at all of today’s economic events, check out our economic calendar.