Price of Gold Fundamental Daily Forecast – Value Buyers Defending Gold Inside $1311.40 to $1296.20

Gold futures are trading slightly lower early Thursday on light volume ahead of today’s release of U.S. consumer inflation data at 1230 GMT. Traders are also following U.S. Treasury yields and the U.S. Dollar.

At 0812 GMT, June Comex Gold futures are trading $1312.10, down $0.90 or -0.08%.

Gold broke sharply on Wednesday after the U.S. 10-year Treasury yield surged through the psychological 3% level for the second time in less than a month. However, the market was able to claw back more than half of the losses when the U.S. Dollar reversed to the downside.

Technically, the market is finding strong support inside a major retracement zone, bounded by $1311.40 to $1296.20. Buyers are defending this area because they see value.

Fundamentally, there is some geopolitical related buying going on in reaction to President Trump’s decision to withdraw from the Iran nuclear deal. Rising crude oil prices are also driving up commodity-linked currencies which is helping to weaken the dollar against a basket of currencies.

In economic news, the U.S. Labor Department said producer prices edged up just 0.1 percent in April – the smallest increase since December – capped by a slump in food costs. The department said that the read on the producer price index, which measures inflation pressures before they reach consumers, followed a 0.3 percent rise in March.

Core prices, which exclude volatile energy and food, matched expectations of a 0.2 percent increase in April. Over the past 12 months, wholesale prices are up 2.6 percent while core wholesale prices have risen 2.3 percent, according to Reuters.

Forecast

On Thursday, investors will be paying close attention to the U.S. Core Consumer Price Index which is expected to come in at 0.2 percent for April. A bigger-than-expected change should drive U.S. Treasury yields higher. This will also help support the case for additional rate hikes by the Fed later this year. CPI is expected to come in at 0.3%.

Investors will also get the opportunity to react to Weekly Unemployment Claims, which are expected to come in at 219K, a 30-year Bond Auction and the Federal Budget Balance.

Gold prices could spike lower if the CPI data blows away the estimate to the upside and Treasury yields and the U.S. Dollar surge to the upside. However, these gains could be offset if rising crude oil prices drive up the value of commodity-linked currencies.