Price of Gold Fundamental Daily Forecast – US Inflation, Income, Spending Reports to Drive Price Action

Gold futures are inching higher early Friday amid a down tick in U.S. Treasury yields. The move follows a volatile session on Thursday that found the market plunging following a test of a one-week high. The catalyst behind the move was a jump in U.S. Treasury yields, following the release a pair of strong economic reports. The direction of yields on Friday is also expected to control the price action in gold.

At 08:31 GMT, June Comex gold futures are trading $1771.40, up $3.10 or +0.18%.

Despite the small gain on Friday, gold is in a position to post its worst week in a month. Nonetheless, bullion was poised for its first monthly gain of the year.

Treasury Yields Driving the Price Action

Earlier in the week, the Fed held interest rates and its bond-buying program steady. Fed Chair Jerome Powell also said that it wasn’t time to change policy given steady coronavirus cases and a struggling job market.

This news drove yields lower and gold prices higher on Wednesday, but conditions suddenly changed on Thursday following the release of a government report that showed U.S. economic growth accelerated in the first quarter as fiscal stimulus fueled consumer spending.

On Thursday, U.S. Treasury yields rose after the U.S. Commerce Department said first-quarter gross domestic product rose 6.4%, compared to the 6.5% expected by economists polled by Dow Jones.

Economic activity boomed to start 2021, as widespread vaccinations and more fuel from government spending helped get the U.S. closer to where it was before the COVID-19 pandemic struck, the Commerce Department reported.

Yields were further boosted and gold spiked to the downside after the Labor Department said initial jobless claims fell to a pandemic-era low last week, but the number was higher than expected.

Daily Forecast

On Friday, gold traders face a slew of economic reports that could drive further volatility in Treasury yields. Gold could continue to feel further downside pressure if the reports show a booming economy.

The Core PCE Price Index, the Fed’s preferred measure of inflation, is expected to show a rise of 0.3%. This is up from last month’s 0.1% reading.

The Employment Cost Index, an important measure of labor market strength, is expected to remain flat at 0.7%.

Personal Income is expected to jump 20.1% from -7.1% and Personal Spending is forecast to come in at 4.3%, much better than last month’s 1.0% loss.

Other reports include Chicago PMI, Revised University of Michigan Consumer Sentiment and Revised University of Michigan Inflation Expectations.

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