Price of Gold Fundamental Daily Forecast – Rising U.S. Dollar Could Spike Gold Prices to $1230.70

Gold prices remain under pressure on Friday, shortly before the regular session opening in New York. Earlier today, the market hit a low of $1239.10, putting it in a position to test last week’s low at $1238.80 and possibly challenge the July 7, 2017 main bottom at $1230.70.

At 0939 GMT, August Comex Gold is trading $1240.70, down $5.90 or -0.48%.

The catalysts behind this week’s plunge in gold prices have been the rising U.S. Dollar, steady interest rates and increased demand for higher risk assets. The dollar has been primarily driven by strong U.S. producer and consumer inflation data this week, which indicates the Fed is likely to remain on track to raise its benchmark interest rate at least two more times this year.

On Thursday, gold was pressured by the news that U.S. consumer prices recorded their largest increase in nearly 6-1/2 years in the year through June, while the monthly pace continued to suggest a steady buildup of inflation.

In other news, Fed Chairman Jerome Powell said he believes the U.S. economy remains in a “good place,” with recent government tax spending programs likely to boost gross domestic product for perhaps three years.

Forecast

Gold is set to finish the week down about one-percent. Although we could be looking at aggressive buyers trying to defend last week’s low at $1238.80 early on Friday, in my opinion, it is going to take a perfect storm of events to turn prices higher for the day, or the week. The perfect storm would consist of lower demand for risky assets, a steep drop in U.S. Treasury yields and a plunge in the U.S. Dollar. Other than a surprise event, there aren’t any major events today that could cause a dramatic turnaround to the upside in gold prices.

Today’s economic reports are all of the minor nature. Import Prices are expected to rise 0.1%, up slightly from 0.0%. Preliminary University of Michigan Consumer Sentiment is expected to come in at 98.1, down slightly from 98.2. Perhaps this report will reveal how consumers feel about the Trump Administration’s global tariffs.

At 1500 GMT, the U.S. Federal Reserve Monetary Policy Report is due to be released. The Fed releases this report twice a year in February and July. It provides insight into the conduct of monetary policy and economic developments and prospects for the future for the Senate Committees to review. The U.S. Dollar has been known to react to this report.