Price of Gold Fundamental Weekly Forecast – Rapidly Approaching Value Area at $1272.70 to $1253.00

Gold futures were pressured all week, following through to the downside following a steep sell-off on April 11. Besides the strengthening U.S. Dollar, which made dollar-denominated gold a less-desirable asset, technical pressure also helped accelerate losses after the precious metal turned lower for the year.

Last week, June Comex gold settled at $1276.00, down $19.20 or -1.48%.

In addition to the strengthening U.S. Dollar, gold was also pushed to near its lowest level since the end of December last week as economic data from China improved enough to relax concerns over a global economic slowdown. Dampening fears of a potential global recession prompted traders to lift protective hedges in gold and put their money to work in higher-yielding assets.

Among the reports driving down demand for safe-haven gold were better-than-expected China GDP data and improvements in the U.S. trade balance and retail sales. Additionally, less-bullish data from the Euro Zone on Thursday drove down the Euro, while pushing up the U.S. Dollar Index. This helped reduce demand for dollar-denominated gold.

Weekly Forecast

Given the plethora of this week’s U.S. economic reports, it looks as if the direction of the gold market this week is going to be controlled by the U.S. Dollar.

This week, the dollar should be impacted mostly by Durable goods with Advance GDP a close second.

Core Durable Goods are expected to come in at 0.2%, better than the previously reported -0.1%. Durable Goods Orders are expected to have risen by 0.7%, an improvement from last month’s -1.6%.

Due to the government shutdown earlier in the year, there are going to be two Durable Goods reports in April. The first one, released on April 2, showed new orders for key U.S.-made capital goods unexpectedly fell in February and shipments were unchanged, but data for January was revised slightly higher.

Advance GDP is expected to come in unchanged at 2.2%. The last report, released on March 28, showed U.S. economic growth cooled by more than initially reported last quarter on revisions to consumer and government spending, signaling mounting challenges to the expansion as it nears a record duration.

Gross Domestic Product grew at a 2.2 percent annualized rate, Commerce Department data showed late last month, less than the initial 2.6 percent reading and projections for a revision of 2.3 percent.

June Comex gold is rapidly approaching a key value zone at $1272.70 to $1253.00. This zone represents 50% to 61.8% of the August 2018 main bottom at $1189.30 to the February 2019 main top at $1356.00 trading range. Buyers could show up on a test of this zone. A failure at $1253.00, will send a bearish signal.