Price of Gold Fundamental Daily Forecast – Trend Changed to Up, Near-Term Target $1335.90

Gold prices are trading steady-to-better early Friday on light volume. The market is edging higher despite a little strength in the U.S. Dollar Index, which is being helped by a weaker Euro.

At 0812 GMT, June Comex Gold futures are trading $1322.50, up $0.20 or +0.02%.

Gold was boosted on Thursday by drop in the U.S. Dollar which made it a more attractive asset. Rising geopolitical tensions in the Middle East were also supportive.

The US. Dollar was under pressure against a basket of currencies on Thursday, as a smaller-than-expected rise in consumer inflation encouraged long investors, betting on an acceleration in consumer prices that could drive the Fed to raise interest rates more aggressively, decided to book profits following a prolonged rally in terms of price and time.

The Labor Department said on Thursday its Consumer Price Index rose 0.2 percent after slipping 0.1 percent in March. In the 12 months through April, the CPI increased 2.5 percent, the biggest gain since February 2017, after rising 2.4 percent in March.

Excluding the volatile food and energy components, the CPI edged up 0.1 percent after two straight monthly increases of 0.2 percent. The so-called core CPI rose 2.1 percent year-on-year in April, matching March’s increase.

Economists had forecast the CPI rebounding 0.3 percent in April and the core CPI climbing 0.2 percent.

Additionally, U.S. government debt yields fell Thursday after U.S. consumer inflation, a measure of price growth in the economy, fell short of Wall Street’s expectations. Rising inflation is a threat to Treasury prices because it erodes the purchasing power of their fixed payments, putting upward pressure on rates.

Investors continued to react positively to Tuesday’s decision by President Trump to withdraw from an international nuclear accord with Iran, raising the risk of conflict in the Middle East and increasing the appeal of safe-haven assets such as gold.

In other news, North American gold-backed exchange-traded funds registered inflows in April at their highest level since September 2017, with safe-haven purchases ushered in by a trade stand-off between the United States and China, Syria tensions and worries about possible U.S. sanctions on Russia.

Additionally, shortly after Trump’s announcement on the U.S. withdrawal from the Iran nuclear deal, Israel said on Thursday that it had attacked nearly all of Iran’s military infrastructure in Syria after Tehran fired rockets at Israeli-held territory for the first time.

Forecast

Gold prices will be controlled today by the movement in the U.S. Dollar and any escalation in geopolitical tensions. A weaker U.S. Dollar or a drop in demand for risky assets should be supportive for gold prices.

Investors will also get the opportunity to react to data on U.S. Import prices and consumer sentiment.

The trend turned up on the daily chart on Thursday. If the upside momentum continues, we could see a rally into $1335.90 to $1343.80 over the near-term.