Gold futures are trading lower shortly before the U.S. opening. All week, the precious metal has been trading inside last Friday’s range with a downside bias towards a multi-year low at $1212.50. The market is also in a position to post its fifth weekly decline. Furthermore, we expect to see this week’s U.S. Commodity Futures Trading Commission report to show hedge fund and money managers increased their net short positions.
At 1002 GMT, December Comex gold is trading $1217.70, down $2.20 or -0.19%.
The strong dollar has been the primary influence on gold prices this week. Despite heightened geopolitical tensions, gold short-sellers are still in control and thwarting any attempts from speculative counter-trend bulls to drive prices higher.
Early Friday, the U.S. Dollar is extending gains to hit a 13-month high against a basket of major currencies. This is helping to pressure dollar-denominated gold futures. Additionally, the dollar is getting added support from a falling Russia rouble in response to fresh U.S. sanctions and a plunging Turkish Lira, which touched a record low in the wake of a diplomatic rift with the United States.
Finally, expectations for higher interest rates in the United States is also helping to make the U.S. Dollar a more attractive investment. The U.S. economy is performing “very well” with continued growth clearing the way for one or two more Fed rate hikes later this year.
Today, gold investors will get the opportunity to react to the latest U.S. consumer inflation data with the release of the July Consumer Inflation (CPI) report at 1230 GMT. It is expected to show a 0.2% increase, up from 0.1%. Core CPI is also expected to post a 0.2% gain, matching June’s increase.
The Federal Budget Balance is expected to come in at -76.5 Billion, up from -74.9 Billion. This report measures the difference in value between the federal government’s income and spending during the previous month. A negative number indicates a budget deficit.
So far today, gold traders are showing almost no reaction to geopolitical turmoil in Turkey, primarily because it’s making the U.S. Dollar stronger. The Turkish Lira collapsed to an all-time record low against the dollar, but the country’s leader brushed aside concerns, telling Turks “we have our God.”
The latest bout of selling comes after a Turkish delegation returned from the United States with apparently no progress on the detention of a U.S. pastor. President Trump said in July that the U.S. would place “large sanctions” on the country for the pastor’s detention.
This article was originally posted on FX Empire
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