Price of Gold Fundamental Daily Forecast – Pressured by Improving Global Economic Picture

Last week’s price action indicates that gold traders are becoming increasingly sensitive to economic data and stock market performance. Today is likely to be no different. Gold prices could continue to weaken if macro-economic data and risk-taking sentiment continues to improve.
James Hyerczyk
Comex Gold

Firming Treasury yields and steady demand for stocks ahead of another day of earnings releases are helping to pressure gold prices on Monday. The U.S. Dollar Index is trading lower, but that merely reflects the stronger Euro that controls the index because of its 57% weighting. The dollar is trading higher against most major currencies, but lower against the Japanese Yen.

At 11:16 GMT, June Comex gold is trading $1289.40, down $5.80 or -0.45%.

Traders are saying the catalyst behind the pressure is follow-through selling related to last Friday’s better-than-expected trade balance data from China. The news dampened concerns over a global economic slowdown.

According to Reuters, also helping risk-on sentiment were positive comments on U.S.-China trade relations from U.S. Treasury Secretary Steven Mnuchin. On Saturday, Mnuchin said a U.S. – China trade agreement would go “way beyond” previous efforts to open China’s markets to U.S. companies and hoped that the two sides were “close to the final round” of negotiations.

In other news, last week, the International Monetary Fund lowered its forecast for the global economy. Over the week-end, officials in the joint communique of the International Monetary Fund’s steering committee said the global economy was still not out of the woods with trade disputes and tighter financial conditions still remaining top threats to the pace of global growth.

Last Friday, the Commodity Futures Trading Commission said speculators increased their bullish wagers in COMEX gold in the week to April 9.

Daily Forecast

Last week’s price action indicates that gold traders are becoming increasingly sensitive to economic data and stock market performance. Today is likely to be no different. Gold prices could continue to weaken if macro-economic data and risk-taking sentiment continues to improve.

On Monday, the key U.S. report is the Empire State Manufacturing Index. It is expected to come in stronger at 8.1, up from the 3.7 reported last month.

Several Fed speakers are also on tap including FOMC Members Evans and Rosengren. Traders will be looking for comments on the strength of the economy and future interest rate decisions. Although the U.S. Federal Reserve surprised traders in March by saying it would not raise rates in 2019, the recent strong economic data suggests that a rate cut is not likely either. This is helping to weigh on gold prices.

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