Price of Gold Fundamental Daily Forecast – Rising U.S. Dollar Continues to Inflict Pain on Gold Bulls
Gold futures are plunging on Thursday as the stronger U.S. Dollar is weighing on foreign demand for the dollar-denominated asset. A rise in U.S. Treasury yields is also weighing on prices as well as demand for higher-risk assets. Driving the dollar higher is safe-haven buying as investors seek protection against stock market volatility.
At 12:45 GMT, June Comex gold is trading $1306.30, down $10.80 or -0.82%.
Gold was trading mostly lower early in the session but the selling accelerated just a short while ago after the Commerce Department reported that economic growth in the U.S. slowed in the final part of 2018, with GDP posting a gain of just 2.2 percent in the fourth quarter.
The government report showed that the final reading was in line with expectations of economists surveyed. It was also down from the previous estimate of 2.6 percent and left full-year growth at 2.9 percent. It was also down from the third quarter’s 3.4 percent gain. Overall, however, 2018 was the best year for the economy since 2015 and well above the 2.2 percent increase in 2017.
The GDP report was stale news with investors focusing on new concerns over a U.S. recession. Gold has become the fall guy with interest rates plunging and the yield curve inverting, while the stock market continues to attract buyers due to optimism over the start of U.S.-China trade talks.
Furthermore, during this tumultuous time period, investors have chosen the dollar as their safe-haven asset of choice after nearly all of the major central banks are calling for a weaker economy while hinting that their next move in interest rates will likely be a cut.
At this time, it’s simply the U.S. Dollar versus gold. Investors want the dollar and demand for gold is suffering because of this. Furthermore, professional money managers are also shying away from gold with most of their capital flowing into the safe-haven dollar.