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Price of Gold Fundamental Daily Forecast – End of Quarter Dollar Demand Weighing on Gold Prices

Gold prices are trading lower on Tuesday, pressured by a stronger U.S. Dollar and increased appetite for risk in reaction to better-than-expected Chinese economic data. Nonetheless, the precious metal remained on tract to post its sixth consecutive quarterly increase amid fears over a global slowdown due to the coronavirus pandemic.

At 10:39 GMT, June Comex gold is trading $1612.40, down $30.80 or -1.87%.

Japanese Buying Dollars

The U.S. Dollar is trading higher against a basket of major currencies with solid gains being posted against the Japanese Yen. Japanese investors and companies are buying the dollar to cover a greenback shortage before their fiscal year ends on March 31.

Strong Chinese Factory Data Drives Risk Demand

For weeks, gold and equities have been moving in tandem. However, today they are moving in opposite directions which could be an early sign that their relationship is returning to normal. It’s still early to say it is. We’ll have confidence that it is if stocks break and gold rallies. Furthermore, we’re going to have to see how gold reacts to Treasury yields and the U.S. Dollar.

Meanwhile, traders are reacting to a report from China that showed its official manufacturing Purchasing Managers’ Index for March came in better than some analysts expected.

The reaction to this report has actually been mixed with some traders saying the numbers are meaningless when taken individually and that investors should look at other reports such as industrial production and retail sales before concluding China’s economy has turned a corner.

Some investors see the report as offering a ray of hope with the thought being the U.S. economy will follow the same timeline as China and come in stronger than expected in about 60 days.

Monetary, Fiscal Stimulus Underpinning Prices

Despite today’s early weakness, long-term gold bulls believe the market is being sufficiently supported by massive amounts of government and central bank stimulus. Furthermore, they are saying that gold could surge to the upside due to exploding government debt.

Daily Forecast

A rising U.S. Dollar could weigh on gold prices today, encouraging profit-taking and allowing the market to regroup at lower price levels. Our work suggests that we could see a pullback to $1580.40 before buyers return.

This article was originally posted on FX Empire

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