Price of Gold Fundamental Daily Forecast – Traders Adjusting to Lower Expectations of June Rate Cut

Gold futures are being pressured on Monday as investors adjust positions ahead of this week’s Federal Reserve interest rate decision and monetary policy statement on Wednesday. Traders are also watching the movement in U.S. Treasury yields, the U.S. Dollar and demand for riskier assets for direction. The Fed is expected to leave rates at current levels, which comes as a surprise to bullish gold traders who had been betting on an interest rate cut in June.

At 12:37 GMT, August Comex gold is trading $1343.20, down $1.30 or -0.10%.

After hitting a 14-month high on Friday, prices sold off sharply as expectations of a Fed rate cut fell following the release of stronger-than-expected U.S. retail sales data. The move produced a potentially bearish closing price reversal top that was confirmed earlier today.

Expectations of a rate cut at the U.S. Federal Reserve’s June 18-19 meeting fell to 21.7% from 28.3% on Thursday after the retail sales report, according to the CME Group’s FedWatch tool. But bets for monetary policy easing at the July meeting remain at 85%, and at the September meeting at 70%.

In other news, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.6% to 764.10 tonnes on Friday from 759.70 tonnes on Thursday.

Hedge funds and money managers also raised their net long positions in COMEX gold in the week to June 11, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

Daily Forecast

On Monday, gold prices are recovering from their lows following the release of a weaker-than-expected Empire State Manufacturing Index report. It came in at -8.6, well below the 12.1 forecast and 17.8 previous read.

Later today, traders will get the opportunity to react to the NAHB Housing Market Index and TIC Long-Term Purchases.

Gold traders will be eyeing the U.S. Dollar for direction because this is the market which drove the price action late last week. A correction in the dollar could trigger an intraday rally in gold prices.

We’re not expecting major moves in Treasury yields or the stock market ahead of the Fed data on Wednesday, therefore, gold prices are likely to remain rangebound over the next two sessions.