Gold Price Fundamental Daily Forecast – Hard to Rally with 2-Year Treasury Yield at 15-Year High

Gold prices are edging lower on Friday, but trading inside yesterday’s wide range, suggesting investor indecision and impending volatility. The market is mirroring a slight recovery in the U.S. Dollar against a basket of currencies as well as a rebound in U.S. Treasury yields, following an earlier dip.

Traders are now bracing for the U.S. Consumer Confidence report, due to be released at 14:00 GMT. The report is expected to come in at 97.6, up slightly from the previously reported 95.7.

The JOLTS Job Openings report will also be released at 14:00 GMT. It is expected to show a slight drop from 10.70M to 10.37M>

FOMC Member Williams is also scheduled to speak at 15:00 GMT.

At 13:30 GMT, December gold futures are trading $1743.40, down $6.30 or -0.36%. The SPDR Gold Shares ETF is at $161.25, down $0.61 or -0.39%.

Gold Traders Eyeing Treasury Yields for Clues about the Dollar’s Next Move

U.S. Treasury yields are trying to claw back from a slight retreat earlier in the session after the 2-year rate hit its highest level since November 2007 in the previous session. The yield on the short-term 2-year Treasury note was little changed, last trading at 3.44% – close to its highest level in nearly 15 years.

This is a significant development because it’s going to be hard to attract long-term buyers of gold with a 2-year yield so attractive. Why should an investor buy gold and hold it for two-years and not get paid interest when he can get 3.44% risk free over the next two-years? This is the question to consider when contemplating whether to buy and hold gold until at least September 2024.

Short-Term Outlook

Gold is expected to remain under pressure over the short-run because the message from the world’s top finance chiefs at last week’s Jackson Hole, Wyoming Symposium was loud and clear:  Rampant inflation is here to stay and taming it will take an extraordinary effort, most likely a recession with job losses and shockwaves through emerging markets.

A serious situation has developed and the central banks are going to do whatever it takes, for as long as it takes to drive inflation lower to avoid risky their credibility on inflation fighting skills. According to some economists, losing this current inflation battle could rock the foundations of modern monetary policy. So this is likely to mean that central bankers from around the world are going to invoke the famous, “Not on my watch”, response usually reserved for generals going to war.