Price of Gold Fundamental Daily Forecast – Sellers Reacting to Rising Treasury Yields; PPI Up Next

Gold posted a wicked two-sided trade on Tuesday as investors reacted to a stronger U.S. Dollar and geopolitical concerns over President Trump’s decision to leave the Iran nuclear deal.

June Comex Gold futures settled at $1313.70, down $0.40 or -0.03%.

Speculative bullish traders believe the decision by Trump to leave the deal could raise risk aversion in the broader markets, helping gold, which is seen as a safe haven asset that holds its value in times of geopolitical turmoil. Bearish traders expect any gains to be limited because of the stronger U.S. Dollar and expectations for higher interest rates.

In other news, the NFIB Small Business Index came in at 104.8, lower than the 105.2 estimate. The JOLTS Job Openings report came in at 6.55 million, better than the 6.02 million estimate and 6.08 million previous read. The IBD/TIPP Economic Optimism report came in better than expected at 53.6.

The surge to a record high in March by the JOLTS Job Openings report suggests that a recent slowdown in hiring was probably the result of employers having difficulties finding qualified workers. The report also showed more workers voluntarily quit their jobs in March, a sign of confidence in the labor market that economists believe will help to push up wage growth this year.

Essentially, the JOLTS report bolsters expectations that inflation will accelerate and keep the Federal Reserve on track to raise interest rates at least two more times this year.

Forecast

Gold prices are plunging early Wednesday due to the stronger U.S. Dollar, which is getting a boost from rising Treasury yields.

At 0850 GMT, June Comex Gold futures are trading $1306.00, down $7.70 or -0.59%.

Gold traders are reacting to sharply lower June 10-year U.S. Treasury note futures, which move inversely to yields. The market is rapidly approaching a low reached on April 25, which put the T-note yield slightly above the psychological 3.00% level.

Traders seem to be ignoring the potential geopolitical risks associated with the U.S. withdrawal from the Iran nuclear deal.

Later today, investors will get the opportunity to react to a U.S. report on producer inflation. PPI is expected to come in at 0.2%, down from 0.3%. Core PPI is also expected to come in at 0.2%, down from 0.3%.

A stronger-than-expected PPI number could send gold prices sharply lower because this will support the Fed’s plan to raise interest rates at least two more times in 2018.