Price of Gold Fundamental Daily Forecast – Rate of Decline Slowing; Could Be Ripe for Counter-Trend Move

Gold futures are edging lower on Friday after touching a nine-month low earlier in the session and are currently in a position to post its third straight weekly decline. Pressuring gold are rising Treasury yields and a stronger U.S.

Higher Treasury yields hurt demand for gold because the precious metal doesn’t pay you any interest to hold it. They also make the U.S. Dollar a more desirable currency, which reduces foreign demand for dollar-denominated gold.

At 11:40 GMT, April Comex gold is trading $1696.10, down $4.60 or -0.27%.

Fed Chair Powell Creates More Problems for Gold Bugs

A wave of heavy selling pressure and heightened volatility hit the gold market on Thursday after Federal Reserve Chairman Jerome Powell failed to reassure investors that central bank policymakers would keep surging bond yields and inflation expectations under control.

Powell said the economic reopening could “create some upward pressure on prices,” reiterating that the central bank would be “patient” before changing policy even as it saw inflation pick up in what it expects would be a transitory fashion.

The Fed chief did acknowledge the rapid rise in rates recently caught his attention, but said the Fed would need to see a broader increase across the rate spectrum before considering any action, he said during the Wall Street Journal Jobs Summit Thursday.

Powell said price increases above the Fed’s 2% target for a couple quarters or more would not cause consumers’ long-term inflation expectations to materially change.

Daily Forecast

Traders are expecting some volatility with the release of the U.S. jobs report later today. I say it’s 50/50 whether volatile conditions prevail. Sometimes this report is a dud, producing very little movement. Traders seem to be more sensitive to comments from Powell than the reports lately.

Don’t be surprised by a counter-trend move that could get the gold bugs and newsletter writers excited. We need them to feed the bear market.

The government will release its February Non-Farm Payrolls report at 13:30 GMT. The headline number is expected to show the economy added 210,000 new jobs, compared to just 49,000 in January, according to Dow Jones. Average Hourly Earnings are expected to increase 0.2% and the Unemployment Rate is expected to hold steady at 6.3%.

Trading Tip:  Don’t trade off of the headline jobs number. Use the June 10-year Treasury note for guidance. There are just too many Non-Farm guesses out there. You won’t be able to tell if it’s bullish or bearish.

You also may want the T-notes to settle before making your move. Sometimes there is a reaction to the headline number and a different reaction to the unemployment rate. This causes whipsaw price action. Don’t force a trade either. Sometimes there is little reaction to this report.

If T-notes are moving lower, rates are rising. This tends to be bearish for gold.  If T-notes are moving higher, rates are falling. This tends to be bullish for gold.

Gold starts the session on the bearish side of the 50% to 61.8% retracement zone of last year’s trading range. It’s not going to take a lot to change the short-term trend. All gold has to do is break the pattern of lower tops and lower bottoms. The best buy signal will occur when a bullish newsletter writer turns bearish. I told you we need them.

For a look at all of today’s economic events, check out our economic calendar.