Price of Gold – Fundamental Forecast, April 13, 2017

Gold futures surged on Wednesday after dovish comments from President Trump drove the U.S. Dollar sharply lower. The market was also underpinned throughout the session by increasing tensions over North Korea and Syria.

At 0507 GMT, June Comex Gold futures are trading $1287.80, up $9.70 or +0.76%.

The dollar-denominated gold market surged yesterday after Trump said the dollar was “too strong” and would prefer the Federal Reserve keep interest rates low.

In an exclusive interview with The Wall Street Journal, Mr. Trump said that “It’s very, very hard to compete when you have a strong dollar and other countries are devaluing their currency.”

His comments fueled a sell-off in the U.S. currency, making gold a more attractive investment. A weaker dollar makes gold more affordable to foreign investors. Conversely, gold struggles when yields rise because it doesn’t pay a dividend or interest.

Geopolitical risks are also forcing investors to stay fine-tuned to the gold market. These risks are being triggered by jawboning between North Korea and the U.S. and Syria and the U.S.

Also helping to boost gold were comments from Russian President Vladimir Putin. On Wednesday, Putin said that trust had eroded between the United States and Russia under Trump as Moscow delivered an unusually hostile reception to Secretary of State Rex Tillerson in a meeting over Syria.

Tillerson said during a news conference Wednesday that U.S.-Russia relations are at a “low point” and need to improve. “The world’s two foremost nuclear powers cannot have this kind of relationship,” Tillerson said.

As tensions because of these risks intensifies, investors tend to shed risky assets like stocks. When foreign investors sell stocks then are forced to sell the dollar when moving money into gold.

Investors are also worried over the outcome of France’s April 23 presidential vote, where populist candidates loom larger than before.

In other news, U.S. import prices posted their biggest drop in seven months in March, falling 0.2 percent. Export prices, meanwhile, gained 0.2 percent last month.

The Treasury Department said the budget deficit for March totaled $176.2 billion, compared to $108 billion in March of last year because of special factors. A big part of that increase reflected $42 billion in April benefit payments that were shifted into March because April 1 fell on Saturday this year.

Both reports had little impact on the price action by the dollar.

Today, traders will get the opportunity to react to the latest data on U.S. Producer Inflation, weekly unemployment claims and consumer sentiment.

President Trump’s comments have driven gold prices into a major technical area on the charts at $1291.50. This is a potential trigger point for an acceleration to the upside because resistance is scare until $1347.40, the November 9 major top.