Price of Gold Fundamental Daily Forecast – Speculative Buyers Betting on Surge Over $1238.60.

Gold futures finished higher on Monday after the U.S. Dollar fell to a multi-month low as traders continued to react to muted U.S. inflation and reduced chances of a Fed rate hike later this year. Gold buyers also took advantage of the mixed U.S. stock market. Increased demand for higher-risk assets like stocks tend to put a lid on demand for lower-yielding assets like gold.

August Comex Gold futures settled at $1233.70, up $5.70 or +0.46%.

After trending lower for months, gold’s current price action suggests that this rally is more than just short-covering. Buyers have regained their confidence in the long side of the precious metal in the wake of weak inflation data and diminished prospects of a third rate hike later this year by the Fed.

Gold was supported by a weaker dollar which hit a multi-month low against a basket of currencies on Monday. The dollar was primary driven lower by a weaker outlook for U.S. Treasury yields.

U.S. government debt prices were slightly lower on Monday, which means yields rose, as investors shifted their focus on upcoming data releases and auctions.

The yield on the benchmark 10-year Treasury Note was slightly higher at 2.303 percent, while the yield on the 30-year Treasury Bond settle around 2.887.

In the U.S. on Monday, the Empire State Manufacturing Index posted a lower-than-expected 9.8. This was well-below the 15.2 forecast and the 19.8 previous reading.

Forecast

Gold is already trading at a two-week high early Tuesday. The market is being supported by speculative buyers betting the Fed won’t raise interest rates again this year. Reports that Senate Republicans will once again delay the vote to repeal and reform Obamacare are also helping to boost gold prices since this casts doubts on the Trump administration’s ability to push through any of its agenda including tax reform.

Although the trend is down according to the daily chart, momentum has shifted to the upside. It’s been a nice rally so far with the market rising from $1204.00 to $1235.30 over the past five sessions. However, the chart indicates we could see an acceleration to the upside if buyers can take out $1238.60 with conviction.

The forecast is based low inflation encouraging the Fed to refrain from tightening further. However, gains could be capped if stocks surge because of increased demand for higher risk assets.