Yahoo Finance Price of Gold Fundamental Daily Forecast – Stronger Euro Should Weaken Dollar Index, Underpin Gold Prices
Gold futures are edging higher on Friday, helped by a weaker U.S. Dollar, flat Treasury yields and a slight drop in demand of risky assets. After a nearly two week sell-off, gold is in a position to close higher for the week. The addition of a new higher bottom at $1196.60 also suggests that buyers are coming in on the breaks. However, one can’t get really excited about the current three day rally unless buyers can over the short-term resistance zone at $1221.30 to $1227.10.
At 0928 GMT, December Comex Gold is trading $1217.30, up $2.30 or +0.20%.
Gold is currently most sensitive to the movement in the U.S. Dollar because, after all, it is a dollar-denominated asset. The dollar is typically controlled by the movement of U.S. interest rates, but this week, it is being manipulated by the Euro.
The Euro has posted a choppy two-sided trade this week, but it is now in a position to close higher for the week. The volatile price action was fueled by geopolitical issues involving Brexit and the simmering tensions between Italy and the European Union.
Traders seem to be dumping the problems over Brexit on the U.K. The tensions between the Italian government and the European Union seem to be easing after Italian Prime Minister Giuseppe Conte said he was looking to work with the EU over his government’s 2019 budget, which was rejected by Brussels earlier in the week. These factors could be supportive for the Euro which could also underpin gold prices.
Something else that could help boost gold prices is that I am not seeing interest in the dollar as a safe-haven asset. Investors looking for protection seem to be putting their money in the Japanese Yen.
Forecast
Gold is developing a slight upside bias today because of the weaker U.S. Dollar Index. Look for this bias to strengthen if the Euro rallies. The Euro is also getting a little boost from positive comments from ECB President Mario Draghi. His speech earlier today was perceived as generally positive about the region. Additionally, Euro Zone bond yields rose after his comments. This helped support the Euro.
Later today, investors will get the opportunity to react to the latest reports on Capacity Utilization, Industrial Production and the Conference Board’s Leading Index.
This article was originally posted on FX Empire
