Price of Gold Fundamental Daily Forecast – Strengthening U.S. Dollar Making Gold Unattractive Investment

Gold futures were pressured all week after the U.S. Dollar hit a new high for the year against a basket of currencies, driving down foreign demand for the dollar-denominated asset. Steady U.S. Treasury yields and firm equity markets also weighed on gold prices. The catalysts behind the selling pressure were positive outlooks for the U.S. and Chinese economies, which softened concerns over a global economic slowdown.

For the week, June Comex gold futures settled at $1276.00, down $19.20 or -1.48%. The market also closed lower for the year.

The primary drivers of the price action this week were better than economic news China and the U.S.

China’s economic growth in the first quarter remained steady at 6.4 percent, topping expectations for a 6.3 percent expansion. Industrial Production came in at 8.5%, topping its 5.6% estimate. Retail Sales were up 8.7%, above its 8.3% forecast

In the United States, the Empire State Manufacturing Index rose to 10.1, up from 3.7 and better-than-the 8.1 forecast. The Trade Balance narrowed to 49.4 Billion, which was a positive. Weekly Unemployment Claims were 192K, below the 207K forecast and 197K previous reading. Core Retail Sales rose 1.2%, beating the 0.7% estimate. The previous month was revised upward to -0.2%. Retail Sales were up 1.6%. This was better than the 0.9% forecast and -0.2% previous reading.

Other than periodic short-covering rallies, buyers were scarce this week. Oversold technical conditions may have been attractive to some speculative buyers, but not enough to produce a higher close. The market closed lower every day of the week.

On Thursday, weaker-than-expected Euro Zone data turned prices higher on an intra-day basis, but these gains were offset by the strong U.S. retail sales data.

Overall, gold futures are fairly priced, given the strengthening U.S. Dollar, steady Treasury yields and a stock market that sits about 1 percent below its all-time highs.