Price of Gold Fundamental Daily Forecast – More Position-Squaring, Short-Covering Ahead of Friday’s NFP Report

Gold futures are trading higher shortly after the New York opening on Thursday. The market is being supported by a weaker U.S. Dollar and lower Treasury yields. Although position-squaring ahead of a number of economic reports today and Friday’s key U.S. Non-Farm Payrolls report underpinned prices early in the session, the market hit its high for the session after the release of the U.S. Weekly Initial Claims report.

At 13:22 GMT, August Comex gold is trading $1782.00, up $10.40 or +0.59%.

Traders are also being supported on Thursday as rising concerns over the spread of the Delta variant of the coronavirus shored up interest in the safe haven asset.

US Weekly Jobless Claims Fall; Layoffs Hit 21-year Low in June

The number of Americans filing new claims for unemployment benefits fell more than expected last week, while layoffs plunged to a 21-year low in June as companies held on to their workers amid labor shortages.

Initial claims for state unemployment benefits dropped 51,000 to a seasonally adjusted 364,000 for the week-ended June 26, the Labor Department said on Thursday.

But the pace of decline has moderated from May, when claims dropped below 400,000 for the first time since March 2020, when mandatory shutdowns of nonessential businesses were enforced to slow the first wave of COVID-19 infections.

Claims increased in mid-June, interrupting a stretch of six straight weekly decreases. Economists polled by Reuters had forecast 390,000 applications for the latest week.

Gold is Drawing Support from Risk-off Sentiment

Some traders are saying that gold is drawing support from the risk-off sentiment as concerns mount over the rapid spread of the COVID-19 Delta Variant. Rising cases of the Delta variant have prompted France to delay the easing of restrictions in the Landes region, while infections have also surged in Asia.

“If the rise of the variant forces authorities to introduce new lockdowns, especially in Europe and the United States, then we may be looking at the risk-averse safe haven trade offering support to gold,” said Ricardo Evangelista, a senior analyst at ActivTrades.

Daily Forecast

I’m not buying the safe-haven buying angle. If the Delta variant were a major concern then investors would be moving into the U.S. Dollar for protection. Furthermore, we’re not even close to another pandemic-like surge, which would lead to the shut-down of major economic centers of activity.

In my opinion, we’re looking a short-covering due to oversold conditions. We’re also looking at some investors hedging their bets against a blow-out U.S. Non-Farm Payrolls report. Finally, we could be seeing some hedging against a steep drop in the stock market that may be extremely overvalued.