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Price of Gold Fundamental Daily Forecast – Tight Range as Players Await Key Inflation Data Later This Week

By:
James Hyerczyk
Updated: May 24, 2021, 20:14 UTC

U.S. Treasury yields drifted lower on Monday, with little economic data due out at the start of the week.

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Gold futures posted a lackluster trade on Monday but still managed to edge higher as a weaker U.S. Dollar and lower Treasury yields bolstered foreign demand for the dollar-denominated asset. There were no major U.S. economic reports, which could have contributed to the greenback’s weakness. Additionally, some of the major players sat on the sidelines ahead of reports due later this week that will offer more insight into the pace of the economic recovery in the United States.

At 19:20 GMT, August Comex gold futures are trading $1885.60, up $6.70 or +0.36%.

US Dollar Languishes Near 3-Month Lows, Bitcoin Recovers

The U.S. Dollar languished near four-month lows against a basic of major currencies on Monday as bets on a robust global economic recovery continued to support currencies seen as riskier.

Since the end of March, the greenback, seen as a safe-haven trade, has retreated steadily with optimism about the global economic recovery. But lately that move down seems to have slowed as traders begin to anticipate higher U.S. interest rates coming when the U.S. Federal Reserve reacts to signs of increasing inflation.

Data due on Friday, including U.S. personal consumption and inflation figures, could move the markets to anticipate a more hawkish tone from the next Fed policy meeting on June 15-16.

Traders are also watching for progress on a new stimulus package in the United States, after the White House pared down its infrastructure bill to $1.7 trillion on Friday but failed to gain Senate Republican backing.

Treasury Yields Dip Slightly to Start the Week

U.S. Treasury yields drifted lower on Monday, with little economic data due out at the start of the week.

The yield on the benchmark 10-year Treasury note fell to 1.617%. The yield on the 30-year Treasury bond dipped to 2.315%.

US Economic Growth Lost Momentum in April – Chicago Federal Reserve

U.S. economic activity continued to grow in April, albeit at a slower pace than in March, the Federal Reserve Bank of Chicago said Monday.

The Chicago Fed National Activity Index decreased to 0.24 in April from 1.71 in March. The reading was below economists’ consensus, who polled by FactSet expected the indicator to come in at 1.2.

Short-Term Outlook

Volatility in the gold market could start to pick up throughout the week with investors focused on the April personal consumption expenditure index, a measure of inflation, due out Friday. Rising inflation has been a concern for markets, with fears that it might force the Fed to tighten its easy monetary policy.

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

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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