Price of Gold Fundamental Daily Forecast – Prices Spike Higher on Weaker-Than-Expected European PMI Data

Gold futures are trading higher on Friday despite the stronger U.S. Dollar. The market is likely being underpinned by another drop in U.S. Treasury yields and lower demand for risky assets. Weaker-than-expected European Flash Manufacturing and Flash Services data is also helping to drive up demand for gold. The news likely means first-quarter GDP growth will come in at about 0.2 percent below the 0.3 percent predicted in a Reuters poll last week.

At 09:33 GMT, the April Comex gold is trading 1311.10, up $3.80 or +0.30%.

Weak Euro Zone Data is Catalyst

Weaker-than-expected Euro Zone Flash Manufacturing PMI data is driving the Euro lower. This is helping to drive the U.S. Dollar higher. France posted lower than expected Flash Services PMI and Flash Manufacturing PMI data, while the Flash Manufacturing PMI in Germany failed to meet the forecast.

According to Reuters, “Businesses across the euro zone performed much worse than expected this month as factory activity contracted at the fastest pace in nearly six years, hurt by a big drop in demand.”

IHS Markit’s Flash Composite Purchasing Managers’ Index, which is considered a good guide to economic health, dropped to 51.3 this month from a final February reading of 51.9, missing a Reuters poll median expectation for 52.0.

“Manufacturing is clearly the main area of weakness and concern at the moment. The manufacturing downturn is gaining momentum and will act as an increasing drag on the economy in the second quarter,” said Chris Williamson, chief business economist at IHS Markit.

“To what extent can the services sector come to the rescue? It certainly helped prop up the economy in the first quarter but is in one of the slowest growth spells since 2016. Forward looking indicators aren’t looking particularly encouraging.”

Daily Forecast

The weak data out of Europe is underpinning gold today despite the stronger U.S. Dollar Index. Weak data means lower interest rates in the Euro Zone and lower rates tend to be bullish for gold.

In the U.S., traders will get the opportunity to react to the latest Flash Manufacturing PMI and Flash Services PMI at 13:45 GMT. Weaker-than-expected data should be bullish for gold.

Flash Manufacturing PMI is expected to come in at 53.5. Flash Services PMI at 55.7.

Existing Home Sales at 14:00 GMT are expected to come in at 5.10 million units. Final Wholesale Inventories are expected to have risen 0.2%.

Late in the session at 18:00 GMT, look for the Federal Budget Balance to show a 228.08 deficit.