Price of Gold Fundamental Daily Forecast – Light-Volume Weakness Ahead of Wednesday’s CPI Report

Gold futures are edging lower on Monday amid a resumption of the U.S. Dollar’s rally. Gains are likely being dampened by a dip in U.S. Treasury yields. Both the dollar and Treasury bonds are getting support from some light safe-haven buying tied to weaker demand for riskier assets.

At 08:20 GMT, August Comex gold futures are trading $1736.30, down $6.00 or -0.34%. On Friday, the SPDR Gold Shares ETF (GLD) settled at $162.33, up $0.10 or +0.06%.

Today’s trade appears to be a little lackluster, but that can be understood with the U.S. scheduled to release it latest data on consumer inflation this Wednesday. This report follows last week’s dismal performance that produced a fourth straight loss.

Gold finished near its late-September low, hurt by the strong dollar and increasing bets for steep interest rate hikes by several major central banks, especially the U.S. Federal Reserve.

Gold futures are going to have a hard time rallying with only a few periodic short-covering rallies expected over the near-term as long as the Fed’s rate hike machine continues to work in overdrive.

Bullish traders even lost one of their allies last week when Atlanta Federal Reserve Bank President Raphael Bostic, until recently among the U.S. central bank’s most dovish policymakers, on Friday said he “fully” supports another three quarters of a percentage point interest rate rise at the Fed’s next policy meeting on July 26 and July 27.

Short-Term Outlook

Trader reaction to a minor pivot at $1738.90 is likely to determine the direction of August Comex gold futures contract on Monday.

Bearish Scenario

A sustained move under $1738.80 will indicate the presence of sellers. This could create the downside momentum needed to challenge last week’s low at $1726.00. This price is a potential trigger point for an acceleration to the downside with the March 8, 2021 main bottom at $1694.90, the next major downside target.

Bullish Scenario

A sustained move over $1738.90 will signal the presence of buyers. The first upside target is Friday’s high at $1751.70. Taking out this level will confirm Friday’s closing price reversal bottom.

This won’t change the main trend to up, but it will shift momentum to the upside. It could also trigger the start of a 2 to 3 day correction with the retracement zone at $1780.50 – $1793.30 the next likely target.