Price of Gold Fundamental Daily Forecast – Pressured by Rising Interest Rate Environment

Profit-taking and position-squaring ahead of Tuesday’s U.S. holiday is helping to boost the U.S. Dollar, putting pressure on dollar-denominated gold. Volume is expected to be below average today as many investors have turned the U.S. Fourth of July holiday into a four-day week-end.

At 0526 GMT, August Comex gold is trading $1237.60, down $4.70 or -0.38%.

In other gold-related news, holdings at the SPDR Gold Trust fell 0.24 percent to 852.50 tonnes on Friday from 853.68 tonnes on Thursday. U.S. Mint American Eagle gold coin sales in the first half of 2017 were the lowest for this period in a decade.

According to the U.S. Futures Trading Commission data released on Friday, hedge funds and money managers reduced their net long positions in COMEX gold for the third straight week in the week to June 27.

Forecast

The fundamental news for gold is bearish. The news about the SPDR Gold Trust and U.S. Mint American Eagle indicate a lack of demand. Additionally, the CFTC data suggests that hedge funds and money managers are moving money out of gold and into more active markets.

Gold traders will be watching and reacting to the U.S. Dollar today. The dollar edged higher against a basket of currencies on Friday and the move is continuing early Monday. Although the Fed is likely to raise rates again before the end of the year, the dollar was under pressure last week as the European Central Bank, the Bank of England and the Bank of Canada strongly hinted that they were ready to move away from accommodative monetary policies.

Usually a weaker U.S. Dollar is supportive for gold prices, but gold buyers were scarce last week because a rising interest rate environment tends to be bearish for gold prices.

Today, gold investors will get the opportunity to react to several reports from the U.S. These include Final Manufacturing PMI, ISM Manufacturing PMI, Construction Spending, ISM Manufacturing Prices and Total Vehicle Sales.

The major report is the ISM Manufacturing PMI. It is expected to come in at 55.0, up slightly from 54.9. A better than expected report should help boost Treasury yields which would put pressure on gold prices.