Price of Gold Fundamental Daily Forecast – Needs to Hold $1344.90 to Sustain Rally

Gold rallied to its highest level since August 2016, fueled by another plunge in the U.S. Dollar. The market gave back some of its gains when the dollar rebounded in response to hawkish commentary from President Trump. Fueling demand for gold were dovish comments from the U.S. Treasury Secretary and hawkish comments from European Central Bank chief Mario Draghi.

April Comex Gold futures settled at $1368.00, up $6.60 or +0.48%.

Dovish comments from Treasury Secretary Steven Mnuchin once again fueled a rapid rally in gold yesterday. On Wednesday, Mnuchin triggered a sharp rally in gold when he said that a weak dollar was good for U.S. trade. But when given the opportunity to clarify his comments at the World Economic Forum early Thursday, Mnuchin did not latch on to the strong U.S. dollar rhetoric used by past Treasury secretaries. This drove gold into a multi-year high.

Mnuchin said during a CNBC-moderated panel that the dollar can fluctuate and he is not concerned by the current weakness, but “in the longer term” believes in the “strength of the dollar.”

Comments from U.S. President Donald Trump helped turn the dollar around and encouraged investors to sell gold with hawkish comments, saying he wanted a “strong dollar”, contradicting earlier comments made by Treasury Secretary Steven Mnuchin.

Trump told CNBC in an interview in Davos, Switzerland, that he ultimately wants the dollar to be strong. This statement was enough to spook the gold bulls.

Forecast

Gold is trading higher early Friday as dollar weakness is continuing to support prices, helping to hold them steady despite Trump’s comments. While catching investors off-guard with his comments, Trump’s support for the dollar may not have been strong enough to reverse gold’s uptrend.

The early price action suggests gold should be able to maintain its upside bias as long as it can hold above $1344.90. Overtaking $1370.50 with conviction could drive prices into $1386.50.

On Friday, investors have the opportunity to react to several key U.S. economic reports as well as any comments from the WEF in Davos, Switzerland.

U.S. Advance GDP is expected to come in at 3.0%, down slightly from the previously reported 3.2%.

Core Durable Goods Orders are expected to rise 0.5% versus -0.1% and Durable Goods Orders are expected to rise 0.9% versus a gain of 1.3%.

The Goods Trade Balance is expected to improve to -68.6 billion and Preliminary Wholesale Inventories are forecast at 0.4%.