Price of Gold Fundamental Daily Forecast – Traders Preparing to Respond to U.S. Durable Goods Reports

Gold prices are trading nearly flat on Monday as investors prepare for a slew of key U.S. economic data this week as well as a speech from Federal Reserve Chair Janet Yellen.

At 0303 GMT, August Comex gold is trading $1255.80, down $0.60 or -0.05%. The range is a scant $1259.00 to $1255.40.

Although gold is struggling to rally early in the session, it is being underpinned by a weaker U.S. Dollar which is under pressure due to low U.S. Treasury yields. They continue to be pressured by investors betting the economy is too soft for additional rate hikes by the Federal Reserve later this year.

Besides this week’s key economic reports, gold prices could be influenced by a few geopolitical events.

On Sunday, the Bank for International Settlements said that although some turbulence in financial markets will have to be negotiated along the way, major central banks should press ahead with interest rate increases.

The start of Brexit negotiations didn’t rattle the markets last week and comments over the week-end by Britain’s Brexit minister David Davis suggest that there shouldn’t be any major issues this week. He said he was “pretty sure” he could negotiate a good deal to leave the European Union.

Forecast

The key reports on Monday are Core Durable Goods Orders and Durable Goods Orders. Treasury yields are likely to respond to these reports which will influence the movement in the U.S. Dollar. Gold traders will then react to the direction of the dollar.

According to estimates, Core Durable Goods Orders are expected to come in at 0.4%, up from minus 0.5%. Durable Goods Orders are forecast to come in at minus 0.5%, slightly better than the previously reported minus 0.8%.

U.S. Treasury yields should respond positively to better-than-expected data. This should help boost the dollar while limiting the gains in gold. Gold could break hard if the numbers trounce the forecast.

Look for gold prices to firm if the data comes in lower-than-expected. Yields should fall on the news, making the U.S. Dollar a less-desirable investment while boosting long interest in gold.