Price of Gold Fundamental Daily Forecast – Picking Up Bid Due to Weaker Dollar

After spending most of the session lower in Asia, gold flipped higher in Europe on Friday. Despite today’s modest recovery, gold is still trading inside yesterday’s wide trading range that was created by a massive short-covering rally following a test of a 19-month low. Nonetheless, the market is still poised to post its biggest weekly decline since mid-2017.

At 0838 GMT, December Comex Gold is trading $1184.80, up $0.80 or +0.07%.

The early selling pressure stopped at $1178.50, well above yesterday’s low at $1167.10. Taking out yesterday’s high at $1189.10 could trigger further short-covering especially with hedge fund and money managers loaded up on the short side of the market.

The daily chart also indicates there is plenty of room to the upside with $1205.90 the next upside target.

Gold traders remain focused on the U.S. Dollar since it is controlling foreign demand for the dollar-denominated asset. Earlier in the week, gold prices plunged as safe-haven investors drove up the dollar in reaction to a currency crisis in Turkey.

Gold prices stabilized and rallied on Thursday as conditions calmed in Turkey and after China announced it had been invited by the United States to resume trade negotiations. This shifted investor sentiment enough to weaken the dollar, triggering a short-covering rally in gold.

At this time, there is no evidence of buying in the gold market. Most of the price action the past two sessions has been fueled by aggressive short-covering. Some of the short-covering has been fueled by a slight change in investor sentiment. Technically oversold conditions also caused shorts to cover.

Until the U.S. Dollar comes down dramatically from current lofty levels, any rallies in gold are likely to be sold. Gold’s movement today will be dictated by the price action in the dollar. With the greenback currently under pressure, gold could begin the regular slightly higher.