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Price of Gold Fundamental Daily Forecast – Stronger Euro, Drop in Yields Providing Support

By:
James Hyerczyk
Published: May 25, 2018, 11:09 UTC

The fundamentals are mixed today and the weak rally suggests traders may have fully-absorbed the news of the cancellation of the meeting between the United States and North Korea. Furthermore, traders don’t seem to be too concerned about President Trump’s disappointment about the outcome of the trade talks with China.

Comex Gold

Gold futures are trading slightly higher early Friday, shortly before the regular session opening. Geopolitical worries over North Korea may be underpinning the market.

The trading is light and the volume is low which suggests investor indecision and impending volatility. Traders seem to be a little unsure about what is driving the price action today.

At 1040 GMT, June Comex Gold futures are trading $1305.60, up $1.20 or +0.09%.

Several catalysts may be supporting gold prices early Friday including concerns over North Korea, a slightly better Euro and another drop in U.S. Treasury yields.

However, gains are likely being limited by increased appetite for risk and a drop in safe haven buying.

Comex Gold
Daily June Comex Gold

Forecast

Although gold is inching higher early Friday, the market is currently testing a potential resistance zone at $1303.80 to $1309.10 which may bring an end to the counter-trend, short-covering rally. Additional resistance is $1311.40. Since the main trend is down, sellers are likely to show up on a test of this zone in an effort to stop the rally and form a potentially bearish secondary lower top.

The fundamentals are mixed today and the weak rally suggests traders may have fully-absorbed the news of the cancellation of the meeting between the United States and North Korea. Furthermore, traders don’t seem to be too concerned about President Trump’s disappointment about the outcome of the trade talks with China.

The Japanese Yen is trading lower and U.S. stock markets higher, which strongly suggests the lifting of geopolitical concerns.

Treasury yields are trading lower which is supportive for gold. Flight-to-safety buying is not driving up government debt issues, but rather the dovish interpretation of the Fed minutes released earlier in the week.

With a U.S. holiday coming up on Monday, we’re facing the possibility of a two-sided, or even sideways trade today as volume is expected to be extremely light ahead of the long week-end.

I do have a slight bias to the downside since the main trend is down and the market is testing a key retracement zone which tends to act like resistance.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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