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Price of Gold Fundamental Daily Forecast – Quietly Trading Higher for Week .. Interesting

By:
James Hyerczyk
Updated: Jun 7, 2018, 10:04 UTC

Rising stocks and rising interest rates should’ve driven gold prices lower, or at least limited gains. Instead, prices have risen this week. This tells me that someone is buying gold and it’s probably the hedge funds. Remember that just a few weeks ago, government data showed long positions at their lowest level of the year.

Comex Gold

Gold prices finished lower on Wednesday, but the price action was still constructive. The market performed remarkably well despite higher Treasury yields and strong demand for risky assets. This indicates the presence of buyers.

On Wednesday, August Comex Gold futures settled at $1301.40, down $0.80 or -0.06%.

Comex Gold
Daily August Comex Gold

It was a modestly lower close given that the traditional fundamentals are primarily stacked against gold, pointing to lower prices.

Increased demand for risky assets and higher U.S. Treasury yields may have helped limit gains in the gold market on Wednesday. Stocks were supported by an easing of geopolitical tensions. Yields were boosted news that the European Central Bank may be planning to end its stimulus program.

U.S. Treasury instruments rose on Wednesday after the European Central Bank’s chief economist said the bank is set to discuss the end of its massive bond-buying program.

The threat of less accommodative monetary policy in Europe, in turn, helped spur a sell-off in American debt, driving yields higher since they move in opposite directions.

The major U.S. stock indexes surged on Wednesday with the blue chip and benchmark indexes driven higher by a strong performance in bank stocks which rose in reaction to rising U.S. interest rates.


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Forecast

Gold prices are edging higher early Thursday as the dollar continued to weaken against the Euro. Investors are also a little on-edge ahead of this week-end’s G-7 meeting, which could fuel the start of a trade war, or lead to the resolution of several key issues.

Investors may also be taking light, safe-haven positions in gold ahead of next week’s key central bank meetings and the U.S.-North Korea summit.

Volatility has been low this week, however, there has been a notable development. For a second consecutive session, gold has settled above last Friday’s close at $1299.30. If you recall, that was the day the U.S. released the better-than-forecast Non-Farm Payrolls report that drove prices to $1293.10.

The NFP report also solidified a June Fed rate hike, while raising the odds of perhaps as many as 2 more rate hikes before the end of the year.

Rising stocks and rising interest rates should’ve driven gold prices lower, or at least limited gains. Instead, prices have risen this week. This tells me that someone is buying gold and it’s probably the hedge funds. Remember that just a few weeks ago, government data showed long positions at their lowest level of the year.

This is also the reason I mentioned last week that it’s risky to short a quiet market. Currently, the market is still trading inside a one month range, but volatility could return if buyers can overtake $1315.60.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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