Price of Gold Fundamental Daily Forecast – Stronger U.S. Dollar Controlling Price Action

Gold is going through a tricky period. Rising concerns over slowing economic growth tend to be supportive for gold, however, at this time investors are moving money into the U.S. Dollar and this is putting pressure on gold prices.  
James Hyerczyk
Comex Gold

Gold futures are trading lower on Thursday, but clawing back most of its earlier losses. Gold is being pressured by a stronger U.S. Dollar, which is driving down foreign demand for the dollar-denominated asset.

Despite the early session weakness, the market continues to be supported by uncertainty over U.S.-China trade relations. Slowing global economic growth is also providing some support because it reduces the chances of central bank rate hikes. Lower rates tend to be supportive for gold prices.

At 13:01 GMT, April Comex gold is trading $1313.20, down $1.20 or -0.08%.

Daily Forecast

Gold is going through a tricky period. Rising concerns over slowing economic growth tend to be supportive for gold, however, at this time investors are moving money into the U.S. Dollar and this is putting pressure on gold prices.

Treasury yields are also dropping, which is usually supportive for gold, but not today. Gold sellers are simply reacting to the U.S. Dollar – Gold relationship.

Last week, the U.S. Federal Reserve turned dovish. The European Central Bank and the Bank of Japan are also warning about economic weakness. Since Wednesday, the market has been pricing in the strong possibility of interest rates cuts in Australia and New Zealand.

Gold is likely to remain under pressure as long as money continues to flow out of the foreign currencies and into the safety of the U.S. Dollar. Traders are being forced to make adjustments because it seems that all of a sudden, all the central banks have turned dovish.

Dovish central banks is generally a good thing for gold, but not until the U.S. Dollar weakens.

Please let us know what you think in the comments below. 

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