Price of Gold Fundamental Daily Forecast – Traders Eyeing Yields, U.S. Dollar

Gold is expected to remain highly sensitive to the movement in Treasury yields and the U.S. Dollar on Friday. The data that could trigger a reaction in the markets is the U.S. Producer Price Index. PPI is expected to have risen 0.1% and Core PPI is forecast to have risen 0.2%.
James Hyerczyk
Comex Gold

Gold futures are trading flat shortly before the regular session opening as investors continue to try to determine whether to price in a 50-basis point rate cut by the Federal Reserve in late July. A 25-basis point rate cut has already been priced in. The price action has been pretty clear this week.

The market rallied on Wednesday when Fed Chair Jerome Powell’s surprisingly dovish tone drove up the chances of a half-a-point rate cut by the Fed at its July 30-31 monetary policy meeting. Prices reversed to the downside on Thursday after stronger-than-expected U.S. consumer inflation data dampened the chances of the larger rate cut.

At 09:55 GMT, August Comex gold is trading $1407.60, up $0.90 or +0.06%.

On Wednesday, Powell drove Treasury yields sharply lower and consequently the U.S. Dollar after he hinted at a potential rate cut later this month, citing unresolved trade tensions and worries over the weakness of the global outlook. The weaker dollar drove up demand for dollar-denominated gold.

“It appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook,” Powell said in prepared remarks.

Powell followed up on Thursday by saying that a rate cut is likely at the Fed’s next meeting as businesses slow investment due to trade disputes and a global growth slowdown. This was enough to underpin the market early in the session.

Gold prices turned south and finished lower after stronger-than-expected U.S. inflation data dampened the prospect of an aggressive Federal Reserve interest rate cut later this month.

Daily Forecast

Gold is expected to remain highly sensitive to the movement in Treasury yields and the U.S. Dollar on Friday. The data that could trigger a reaction in the markets is the U.S. Producer Price Index. PPI is expected to have risen 0.1% and Core PPI is forecast to have risen 0.2%.

Higher than expected numbers will further pressure the chances of a 50-basis point rate cut. This could support yields and the dollar, while weighing on gold prices. Lower-than-expected data will underpin gold, but not necessarily drive it through the recent tops.

U.S.-China trade relations is a wildcard today. On Thursday, President Trump said that China hasn’t followed through on its promise to by U.S. agricultural products. If this begins to anger Trump enough, he may order the U.S. to withdraw from the trade negotiations. This could be bullish for gold because it would raise concerns about the global economy and possibly put a 50-basis point rate cut back on the table.

 

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US