Price of Gold Fundamental Daily Forecast – Lower for the Year, Vulnerable to Steep $15 – $20 BreakKeep an eye on Treasury yields and the stock market today. Yields have been coming back strong as investors have cut the odds of a rate cut and recession. Another spike to the upside in yields could drive gold sharply lower.
Gold futures are being pressured for a fourth straight session on Monday amid a stronger U.S. Dollar, firmer Treasury yields and increasing demand for higher-risk assets. The market is now trading lower for the year while in a position to make a new low for the same period. The technical chart pattern suggests the market may be vulnerable to a $15 to $20 break.
At 11:44 GMT, June Comex gold futures are trading $1286.40, down $4.90 or -0.38%.
Gold continues to be pressured by last week’s positive economic reports from the United States and China. In the U.S., weekly jobless claims surprised traders by dropping to a 49-1/2 year low. This news dampened concerns over a slowing U.S. economy.
In China, better-than-expected credit and export news also dimmed worries about a slowdown in its economy. Traders are now saying the Chinese economy may have turned a corner in response to fresh stimulus from the government that is finally working its way through the economy.
Gold is also being pressured by positive developments over U.S.-China trade relations. Worries are being lifted as the two economic powerhouses move closer to a deal that will end the more-than-year-old trade dispute. Additionally, the absence of any major geopolitical events is also weighing on demand for gold.
Furthermore, as the global economy improves so do Treasury yields. Rising Treasury yields are helping to make the U.S. Dollar a more attractive investment. This tends to drive down demand for dollar-denominated gold futures.
Later today, investors will get the opportunity to react to a few U.S. economic reports. Data on U.S. industrial production and capacity utilization will be released at 13:15 GMT and the National Association of Home Builders Survey will be out at 14:00 GMT.
Keep an eye on Treasury yields and the stock market today. Yields have been coming back strong as investors have cut the odds of a rate cut and recession. Another spike to the upside in yields could drive gold sharply lower. Rising equity prices will continue to encourage gold traders to reduce hedge positions. Capital could be flowing out of gold and into equities as stocks approach their all-time highs.