Price of Gold Fundamental Daily Forecast – Tight Range, Low Volatility Expectations Ahead of Fed Decisions

Gold futures are being pressured on Monday by increased appetite for risky assets and renewed hopes of a timely U.S.-China trade agreement. A slightly rise in Treasury yields is also helping to cap gains. Traders are showing little response to a dip in the U.S. Dollar Index.

Gold and the U.S. Dollar were not connected last week as both assets posted strong gains for the week. This is not going to develop into anything long-term, but over the short-term, both assets are likely to be connected with the movement and direction of U.S. Treasury yields.

Remember that lower interest rates in the U.S. put pressure on the greenback and bond yields, making dollar-denominated gold a more attractive investment.

At 09:22 GMT, June Comex gold is trading $1284.60, down $4.20 or -0.33%.

Daily Forecast

Treasury yields and appetite for risk will continue to drive the price action. The catalyst behind the price action will be a series of U.S. economic reports.

It may confusing to some, but there will be 2 simultaneous releases after the government skipped the data release last month.

The February Core PCE Price Index is expected to come in at 0.2% and the March Core PCE Price index is expected to come in at 0.1%.

February Personal Spending is expected to have risen 0.2% and March Personal Spending is expected to post a 0.7% reading. Personal Income is expected to have risen 0.4%.

As we saw last week, any report that shows slowing inflation or growth is likely to pressure the U.S. Dollar and this should be supportive for gold prices. However, low volume and volatility due to the Fed decisions on Wednesday could hold prices in a tight range.

Essentially, gold isn’t going to go anywhere until traders determine the direction of interest rates this week. This won’t be determined until the Fed issues its policy statement at 18:00 GM% on Wednesday.