Yahoo Finance Price of Gold Fundamental Weekly Forecast – Dollar Is Biggest Influence on Gold’s Direction
Gold futures took advantage of the weaker U.S. Dollar last week, sending the market to its highest level since September. The lower-risk asset was supported by a number of geopolitical events involving Japan, China and the Euro Zone.
Last week, February Comex Gold futures settled at $1334.90, up $12.60 or +0.95%.
Gold was under pressure early in the week as investors continued to react to the previous week’s jobs data which kept the Fed on tract for at least three rate hikes in 2018.
Gold started to consolidate around mid-week after the dollar reached its high against a basket of currencies. The price action was largely influenced by the news that the Bank of Japan would trim its purchases of Japanese government bonds and U.S. corporate debt. The Japanese announcement raised speculation the country’s central bank may wind down its monetary stimulus this year.
Gold was further boosted following a Bloomberg News report that cited unnamed sources are saying that officials in Beijing have recommended China, the largest holder of U.S. Treasurys, to slow or even halt its purchases of that debt. Later in the week, China’s foreign exchange regulator publicly refuted the Bloomberg report on Thursday, saying it cited “false information.” However, the damage was done.
The rally stalled on Thursday after U.S. producer prices fell for the first time in nearly 1-1/2 years in December amid declining costs for services.
However, prices soared on Friday in reaction to a steep rise in the Euro and a plunge in the U.S. Dollar. The sharp rise in the Euro did most of the damage to the U.S. Dollar Index despite a report that showed U.S. core consumer prices posted their biggest gain in 11 months.
Forecast
Last week’s price action suggests that gold has a clean shot at reaching its September top at $1365.80 over the near-term.
The key support are controlling the upside price action is $1317.10. Look for an upside bias as long as gold hold over this technical support level.Price of Gold Fundamental Weekly Forecast – Dollar Is Biggest Influence on Gold’s Direction The direction of the U.S. Dollar will continue to be the catalyst that drives the price action in gold. Basically a weaker Dollar/stronger gold situation. Traders aren’t paying too much attention to the surge in the stock market so appetite for risk probably isn’t an issue at this time.
Monday is a U.S. bank holiday so volume is expected to be extremely light. Most of the U.S. reports next week are mid-to-low level such as the Empire State Manufacturing Index, Capacity Utilization, Industrial Production and the Fed Beige Book.
The markets could also react to Fed speakers, housing data and consumer sentiment.
This article was originally posted on FX Empire
