Price of Gold Fundamental Daily Forecast – Silver Plunge, Firming Dollar Weighing on Prices

Gold futures are trading lower early Tuesday as investors continue to look for a reason to buy the precious metal in the wake of a steep drop in silver futures, increasing demand for higher risk assets, and a stronger U.S. Dollar. Additionally, uncertainty over President Joe Biden’s stimulus package, coronavirus vaccine rollout improvements and improving prospects for the U.S. economy are also weighing on prices.

At 08:11 GMT, April Comex gold futures are trading $1848.90, down $15.00 or -0.80%.

Silver Plunge Drags Gold Prices Lower

When we saw gold only relatively higher on Monday while silver was trading 8-10% higher, we kind of figured that a sell-off in silver would push gold prices lower, and that is what we are witnessing early Tuesday.

Silver dropped more than 2% on Tuesday, retreating from a near eight-year peak it hit the previous session, as a margin hike by the Chicago Mercantile Exchange prompted investors to lock in profits. For you old-timers out there, this is what the COMEX exchange did to the Hunt Brothers in 1980 when they owned about 2/3rds of the silver market.

Global Equity Markets Already Adding to Yesterday’s Gains

U.S. stock futures rose early Tuesday morning after the equity markets kicked off the week with a bounce-back session.

Futures contracts tied to the Dow climbed 163 points. Those for the S&P 500 and the NASDAQ-100 also traded in positive territory. The move in futures follows a broad-based gain for the market on Monday, which saw the Dow add nearly 230 points and all 11 sectors in the S&P 500 rise. The stock market was coming off its worst week since October.

Stocks in Asia-Pacific rose Tuesday following the overnight jump on Wall Street. European stocks opened higher Tuesday as global markets reflect positive investor sentiment that an economic recovery, following the pandemic, is not too far away.

Congressional Republicans Make Counteroffer to Biden

Investors will also be following stimulus negotiations in Washington, where Congressional Republicans made a counteroffer to President Joe Biden’s $1.9 trillion stimulus plan on Sunday.

Biden met with those lawmakers on Monday as Congressional Democrats moved forward passing a reconciliation bill without bipartisan support. White House press secretary Jen Psaki described the meeting as “substantive and productive.”

Daily Forecast

Keep an eye on the U.S. Dollar, especially since it is now hovering near a seven-week high. It is getting close to a breakout to the upside, which is being fueled by the hopes for a speedy U.S. recovery. Dollar bulls may be starting to increase bets amid views that the United States has an advantage in growing is economy and vaccinating its population against COVID-19.

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