Price of Gold Fundamental Daily Forecast – Underpinned by Geopolitical Events, Falling Treasury Yields
August Comex gold prices are inching higher on Friday due to the softer U.S. Dollar. Geopolitical events are also helping to boost demand for the safe-haven asset.
This week’s sell-off in crude oil is likely to keep a lid on inflation, thereby raising doubts about the Fed’s ability to raise interest rates later in the year. This is helping to pressure U.S. Treasury yields.
The yield on the benchmark 10-year Treasury note sat slightly lower at 2.153 percent, while the yield on the 30-year Treasury bond rose 2.727 percent on Thursday. This made the U.S. Dollar a less-desirable investment while increasing foreign demand for dollar-denominated gold.
Risk averse gold traders are also reacting to geopolitical events which are boosting the safe-haven appeal of the precious metal.
Traders are raising concerns over the situation in the Middle East and also the news about China cracking down on some loans made overseas last year.
Gold is also being underpinned by concerns over political events in the United States, the U.K., and North Korea-related developments.
Tensions rose earlier this week as North Korea carried out another test of a rocket engine that the United States believes could be part of its program to develop an intercontinental ballistic missile, a U.S. official told Reuters on Thursday.
Forecast
The geopolitical events may be helping to underpin gold, but the direction of U.S. Treasury yields and the U.S. Dollar are likely to influence the intraday volatility.
Today’s economic events could move the yields. Traders will get the opportunity to react to the latest Flash Manufacturing PMI, Flash Services PMI and New Home Sales.
Flash Manufacturing PMI is expected to come in at 53.1, up from 52.7. Flash Services PMI is forecast at 53.9, up from 53.6 and New Home Sales are expected to increase from 569K to 599K.
Unless geopolitical events escalate on Friday, gold traders are likely to react to the price action and volatility of the Treasury yields.
Look for gold to continue to rally if Treasury yields weaken. Gains could be capped if yields rise.
This article was originally posted on FX Empire
