Price of Gold Fundamental Daily Forecast – Pressured by Firm Dollar, Easing Geopolitical Tensions

The rising U.S. Dollar and the easing of demand for safe-haven assets is putting pressure on gold prices on Monday, shortly before the regular session opening. The catalyst behind the price action is comments from U.S. Treasury Secretary Steven Mnuchin who said on Sunday that a trade war between China and the United States was “on hold”.

At 0938 GMT, June Comex Gold futures settled at $1284.00, down $7.50 or 0.57%.

Over the week-end, Mnuchin and U.S. President Donald Trump’s top economic adviser, Larry Kudlow, said the agreement reached by Chinese and American negotiators on Saturday set up a framework for addressing trade imbalances in the future.

In other news, hedge funds and money managers cut their net long position in COMEX gold contracts by 21,294 contracts to 31,327 in the week to May 15, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.

Forecast

A combination of factors is likely to keep the pressure on gold prices including a bearish technical chart pattern, rising U.S. interest rates, a stronger U.S. Dollar and the easing of geopolitical tensions.

There are no significant economic reports today, but FOMC Member Bostic is scheduled to speak. Last week, Bostic said he’s aware of the dangers of an inverted yield curve, which in the past has been viewed as a sign of impending recession.

“I’ve had extended conversations with my colleagues about a flattening yield curve” and the risks of it inverting, he said at a moderated forum in Augusta, Georgia last Wednesday. “We are aware of it. So it is my job to make sure that doesn’t happen.”

Bostic also said he favors three rate hikes in total this year after three in 2017, though his outlook could change.

“We don’t want to do it so fast that it is disruptive. That is why we are going at a slow, gradual pace,” he said about interest-rate increases. “Hopefully we won’t get to that inversion.”

The chart pattern is bearish with $1247.20 the primary downside target. Sentiment will change if buyers can overcome $1296.20.