Price of Gold Fundamental Daily Forecast – Needs Lower Yields, Weak Dollar to Sustain Rally

Gold futures are trading higher late in the session on Thursday as investors flocked to bullion on a sharp drop in Treasury yields and a weaker U.S. Dollar.

At 18:36 GMT, August Comex gold futures are at $1850.90, up $31.30 or +1.72%. The SPDR Gold Shares ETF (GLD) is trading $172.41, up $1.64 or +0.96%.

Treasury Yields Fall from Highs

U.S. Treasury yields slipped Thursday, even though the Federal Reserve and central banks around the world indicated they would get more aggressive in their bid to curb rising inflation.

The yield on the benchmark 10-year Treasury note trade 8 basis points lower to 3.311%, after hitting an 11-year high earlier in the week, while the 30-year Treasury bond slid 3 basis points to 3.375%.

The 2-year Treasury rate, which is more sensitive to U.S. monetary policy changes, dropped about 12 basis points to 3.156%.

Lower yields help make non-yielding gold a more attractive asset.

Lower Yields, Stronger Peers Drag Dollar Lower

Traders dumped the U.S. Dollar as falling yields helped make the greenback a less-attractive investment. Although the safe-haven nature of the U.S. Dollar appealed to some traders looking for protection against the sell-off in the stock market, they could not overcome the pressure fueled by the drop in yields and the strong rallies in the Swiss Franc and Japanese Yen.

The Swiss Franc jumped on Thursday against the dollar after the Swiss National Bank raised its policy interest rate for the first time in 15 years.

Meanwhile, the Japanese Yen rallied sharply higher as speculators bet the Bank of Japan would join the rest of the major central banks and announce a change in their ultra-dovish policy.

A weaker U.S. Dollar tends to make gold more appealing to holders of foreign currencies.

Technically Speaking…

The main trend is down according to the daily swing chart. A trade through $1882.50 will change the main trend to up.

Holding above the long-term Fibonacci level at $1844.00 will be the key to sustaining the rally. While while taking out the 50% level at $1900.70 could trigger an acceleration into $1938.60 – $1973.20.