Price of Gold Fundamental Daily Forecast – Weaker Dollar Driving Short-Covering Rally

Gold futures hit a new low for the year on Monday after U.S. Treasury Secretary Steven Mnuchin declared that a trade war between the United States and China was “on hold,” fueling a rally in the U.S. Dollar and increased appetite for risky assets.

June Comex Gold futures settled at $1290.90, down $0.40 or -0.03%.

The precious metal was also pressured by expectations that the U.S. Federal Reserve will lift U.S. interest rates again next month, further hurting demand for non-yielding assets like gold.

In other news, hedge funds and money managers cut their net long positions in Comex gold contracts by 21,294 contracts to 31,327 in the week to May 15, data showed on Friday.

---

Suggested Articles

• Crude Oil Jumps after US Secretary of State Pompeo’s Remarks on Iran Strategy
• BoE Governor Carney and the GBP in Focus
• Bitcoin’s Lightning Network: How Can it Solve Bitcoin’s Biggest Problem

---

Forecast

Gold is trading higher early Tuesday. Traders are reacting to a weaker U.S. Dollar that is being driven lower by a strong rally in the commodity-linked Australian, New Zealand and Canadian Dollars as well a strong rebound by the Euro.

At 0805 GMT, June Comex Gold futures are trading $1294.30, up $3.40 or +0.26%.

Early Tuesday, the U.S. Dollar is trading lower against a basket of currencies after hitting a five-month high on Monday. The move is being fueled by a pullback in the 10-year U.S. Treasury yield from a seven-year high set last week.

A dip in Treasury yields and the U.S. Dollar could be supportive for gold over the short-run as investors prepare for the release of the latest Fed meeting minutes on Wednesday at 1800 GMT.

A short-term counter-trend rally in gold will alleviate some of the downside pressure, but gains are likely to be limited because the dollar is being bolstered by generally solid U.S. economic data that has backed the Federal Reserve’s monetary policy tightening stance this year, as well as rising U.S. bond yields that bolstered the greenback’s yield appeal.

There is one report today. Gold traders could react to the Richmond Manufacturing Index if it comes in strong enough to move Treasury yields and the U.S. Dollar higher. However, it’s unlikely to do this as prices are likely to be mostly influenced by investors squaring positions ahead of tomorrow’s Fed minutes.

Join our Telegram Channel