Price of Gold Fundamental Daily Forecast – Calm Stock Market, Firm Dollar Weigh on Gold Prices
Gold prices turned higher on Monday after trading lower early in the session. The market turned positive on flight-to-safety buying tied to weakness in U.S. equity markets. Gold was also supported by weakness in the U.S. Dollar, tied to a strong close in the Euro.
April Comex Gold futures settled at $1317.80, up $5.50 or +0.42%.
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Forecast
Gold is trading lower shortly before the regular session opening in reaction to a firmer U.S. Dollar and the lack of follow-through to the downside by U.S. equity markets. Most of the price action is likely being guided by concerns over the path of U.S. monetary policy for the rest of the year from the two-day Federal Reserve meeting that kicks off later in the day.
At 1023 GMT, April Comex Gold is trading $1311.90, down $5.90 or -0.45%.
Prices could settle into a range today if the volatility and the selling in the stock market subsides. Investors have priced in a rate hike by the Fed, but are really waiting for the Fed’s outlook for monetary policy for the rest of the year, and how much more tightening we are likely to see.
Bearish investors believe Fed Chair Jerome Powell will hike rates at this meeting while signaling three more increases this year.
Not-so-bearish investors think the Fed will raise rates on Wednesday, but may signal only two to three more rate hikes the rest of 2018.
Once the Fed’s intentions are revealed, the focus will shift to the possibility of additional tariffs in the United States and its impact on global trade. While it is generally accepted that rising rates will lead to lower demand for gold, a significant reaction from China and European countries on U.S. tariffs would drive prices higher.
In other news, gold investors may be taking protection against further declines in U.S. stock markets. Holdings at the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 1.26 percent, their best one-day percentage rise since January 18, to 850.84 tonnes on Monday from 840.22 tonnes on Friday.