Price of Gold Fundamental Weekly Forecast – Despite Minor Setbacks, Long-Term View Remains Bullish

Gold posted a two-sided trade last week before finishing higher. Selling pressure early in the week drove the market through the previous week’s low, but the comeback rally later in the week placed the market slightly below its seven year high at $1788.80.

Short-term, the gold market is going to see vicious swings as traders react to volatility in the U.S. dollar, crude oil and the equity markets. Longer-term, the outlook is bullish with help coming from massive amounts of fiscal and monetary stimulus from governments and central banks.

Last week, June Comex gold settled at $1735.60, up $36.80 or +2.17%.

Headlines Tell the Story

Gold hit a one-week low early last week after a month-long rally from panic lows as stock and bond markets calmed after reports suggested the U.S. likely endured the worst of COVID-19. The market was further pressured by a firmer U.S. Dollar amid doubts over the United States’ plans to reopen the world’s largest economy as the novel coronavirus pandemic showed no signs of easing.

Gold also edged higher from the one-week low, helped by dwindling stock markets as U.S. crude prices plunged and concerns about coronavirus-linked economic damage persisted.

Gold was also pressured by investor profit-taking ahead of the weekend, but supported by concerns over the global economic slowdown and massive stimulus measures from major central banks.

These were some of the comments offered last week by a slew of analysts. The swings in the markets matched the swings in the headlines, leading to a choppy trade, but gold still managed to finish higher for the week.

Weekly Forecast

Gold investors are currently wearing two-hats, which means they shouldn’t be surprised by volatile swings over the near-term. Additionally, the long-term outlook is bullish so despite looking ugly sometimes in the short-run, we’re confident there will be investors ready and willing to buy the dips.

We expect to see both retail and institutional support as global balance sheets have ballooned and the outlook for the global economy remains extremely uncertain.

Gold is going to continue to be influenced by the price action in the U.S. Dollar and the equity markets. These two asset classes are going to be driven this week by major U.S. reports on Consumer Confidence, Advance GDP, Weekly Unemployment Claims, ISM Manufacturing PMI and the U.S. Federal Reserve monetary policy statement.

The market could get a boost if the Fed talks about more stimulus. Furthermore, although the President signed a new relief bill last week, House Speaker Nancy Pelosi promises more financial aid will be coming, and this should be supportive for gold prices.