Price of Gold Fundamental Daily Forecast – Weak Euro, Sterling Weighing on Gold Prices

James Hyerczyk
Gold and US Dollar

A spike in the U.S. Dollar against a basket of major currencies is helping to put pressure on gold futures early Tuesday. The drop in gold since last Friday’s high has nearly erased all of the gains attributed to dovish comments from New York Federal Reserve President John Williams on July 18. This suggests that some speculative buyers may have been caught in a bull trap last week, which means we could see some heavy selling pressure if they are forced out of unfavorable positions.

At 09:25 GMT, August Comex gold futures are trading $1418.90, down $8.00 or -0.56%. The market is also going through its “rollover” into the next popular December Comex gold futures contract.

The U.S. Dollar is strengthening against all major components of the “basket” including the Euro, British Pound, Japanese Yen, Canadian Dollar and Swiss Franc.

The Euro, which is trading at its lowest level since June 3, is having the biggest impact on the dollar index. The selling is being fueled by speculators betting on one or several dovish moves by the European Central Bank at its policy meeting on July 25. The ECB can lower rates by at least 10-basis points, announce some form of quantitative easing or both at this meeting, or announce these move are coming in September.

The prime minister election in the UK has British Pound investors on edge, leading to today’s selling pressure. Investors are worried Boris Johnson the front-runner to become the UK’s prime minister, would trigger a “hard Brexit” from the European Union, widely seen as a major risk for the British economy.

Britain’s Conservative Party will announce the results of a leadership election on Tuesday, with Johnson widely expected to win, setting him up to become prime minister on Wednesday.

Additionally, according to the Commodity Futures Trading Commission, hedge funds have increased short positions on the pound to a 10-month high in the week to July 16.

Daily Forecast

The intraday trend in gold is down and likely to remain under pressure if the U.S. Dollar and Treasury yields continue to rise. Additionally, increased demand for risky assets will also weigh on gold prices.

However, the dovish moves by the European Central Bank and the election of Boris Johnson as the UK’s prime minister have been highly anticipated, which makes both the Euro and British Pound, ripe for a “sell the rumor, buy the fact” move.

A reversal to the upside in the Euro and British Pound would send the U.S. Dollar Index lower, which could help drive up demand for the dollar-denominated gold futures contract.

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

Top Promotions

Top Brokers

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