Price of Gold Fundamental Daily Forecast – Weaker Dollar, Stock Prices Should Be Supportive

Gold prices closed lower on Friday and also for the week as buyers failed to respond to the weaker U.S. Dollar and rising expectations that the U.S. Federal Reserve will reduce the number of expected rate hikes it had planned in 2018. Increased demand for higher-yielding assets also pressured gold prices.

February Comex Gold futures settled at $1291.80, down $5.00 or -0.39%.

Forecast

Gold prices are recovering early Monday, remaining slightly below but within striking distance of last week’s high at $1301.70. A weaker dollar is helping to support prices today. The catalyst behind the weaker dollar and stronger gold is concern over the Fed’s cautious view of inflation.

At 1000 GMT, February gold is trading $1296.10, up $4.40 or +0.34%.

Last week, minutes of the Fed’s previous meeting revealed that some policymakers had voiced concerns over inflation and emphasized they would be looking at upcoming economic data before deciding the timing of future rate rises.

Later today, investors will get the opportunity to react to the latest data on New Home Sales and speeches from FOMC Member Kashkari and Dudley. Weaker than expected housing data and dovish speeches could be supportive for gold prices.

Last week’s price action indicates that gold investors are watching equity prices more than the direction of the U.S. Dollar. Therefore, I have to conclude that a meaningful sell-off in U.S. equity indexes will be the trigger for a spike to the upside by gold futures.

Supporting gold prices at this time and helping to hold it in a range are the weaker U.S. Dollar and worries over China’s stock and bond markets.

Gold prices could rally today if the market gets support from a weaker U.S. Dollar and a sell-off in U.S. equity markets.