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Price of Gold Fundamental Daily Forecast – Volatile Reaction Likely if 10-Year Notes Hit 3.00%

Gold futures hit their lowest level since April 9 early Monday as investors continued to dump the dollar-denominated asset in reaction to a stronger dollar, rising U.S. interest rates and expectations for further rate hikes later this year.

At 0808, June Comex Gold futures are trading $1333.30, down $5.00 or -0.38%.

The easing of geopolitical tensions over Syria, a potential trade war between the United States and China and Trump’s peace talks with North Korea in May are also encouraging investors to sell out of safe-haven positions.

In other news, speculators raised their net long positions in COMEX gold by 5,382 contracts to 143,594 contracts in the week to April 17, U.S. Commodity Futures Trading Commission data showed on Friday.

Comex Gold
Daily June Comex Gold

Forecast

The downside momentum in the gold market suggests sellers are increasing their pressure on the market. The recent bottom from April 13 at $1335.50 was taken out easily earlier today. If selling volume continues to rise then we could see a test of the April 6 bottom at $1322.60.

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The week also began with the yield on the 10-year Treasury note sitting near its highest level since January 10, 2014 at about 2.96%. Gold prices could plunge if T-notes breach the 3.00% level with conviction.

Furthermore, the two-year yield hit 2.461 percent, its highest level since September 8, 2008, when the two-year yielded as high as 2.542 percent. Additionally, the yield on the 30-year Treasury bond was up at 3.146 percent, approximately 8 basis points higher since Monday.

Gold traders should also be paying attention to investor appetite for risky assets. This is because when inflationary fears and a jump in interest rates in February and March fueled the return of volatility in the stock market, equity prices plunged and gold prices spiked higher.

Later today, investors will get the opportunity to react to the latest data on U.S. Flash Manufacturing PMI, Flash Services PMI and Existing Home Sales. Stronger-than-expected reports are likely to support the idea that the Fed will raise interest rates multiple times this year. This should help support the dollar while pressuring gold prices.

This article was originally posted on FX Empire

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