logo |

News

    Home   >     Industry    >     Main body

    Price of Gold Fundamental Weekly Forecast – Higher U.S. Real Rates Will Keep the Pressure on Prices

    Abstract:Ongoing strength in domestic data should lead to an incrementally hawkish turn in Fed guidance over the coming months. This would be bearish.

      Gold futures were pressured last week by rising Treasury yields and a steady U.S. Dollar. The catalyst behind the selling pressure driving gold lower was a series of better-than-expected U.S. economic reports. They were strong enough to offset the dovish rhetoric from the U.S. Federal Reserve and Fed Chair Jerome Powell.

      Last week, June Comex gold settled at $1767.70, down $10.10 or -0.57%.

      The Fed left policy unchanged as expected. Additionally, Fed Chairman Jerome Powell acknowledged the U.S. economys growth, but said there was not enough evidence of “substantial further progress” toward recovery to warrant a change to its ultra-loose monetary settings.

      Despite the Feds dovish tone, U.S. Treasury yields inched higher on the back of stronger-than-expected U.S. economic data.

      The U.S. Commerce Department said first-quarter gross domestic product rose 6.4%, versus the 6.5% expected by economists polled by Dow Jones. The Labor Department reported that 553,000 new jobless claims were filed last week, just above the 528,000 estimated by economists.

      Data also showed a 4.2% rebound in U.S. consumer spending in March, amid a 21.1% surge in income as households received additional COVID-19 relief money from the government, supported the dollar. That led to a 0.4% rise in the core personal consumption expenditures (PCE) index, compared with a gain of 0.3% the previous month.

      Weekly Outlook

      A couple of factors point toward the possibility of heightened volatility over the near-term.

      Although the Fed continues to say it will stay the course with its current loose monetary policy until the labor market returns to pre-pandemic levels and inflation exceeds expectations, the action in the Treasury market suggests investors believe central bankers will made a move sooner-rather-than-later.

      “Gold still remains bid (short-term uptrend), it is just not a strong hand right now, because of the month-end rebalancing.” Benchmark U.S. 10-year Treasury yields hovered near their highest in more than two weeks, increasing the opportunity cost of holding non-yielding bullion. Earlier this week, the Fed held interest rates and its bond-buying program steady. “Ongoing strength in domestic data should lead to an incrementally hawkish turn in Fed guidance over the coming months,” UBS analysts said in a note.

      Higher U.S. real rates will likely trigger further ETF outflows, UBS said, adding that they expect bullion to fall to $1,600 per ounce by year-end.

      Goldman Sachs, on the other hand, said it expects to see gold prices at $2,000 an ounce over the next six months

      Somebody has to be right and this could be the source of near-term heightened volatility.

      A stronger-than-expected payrolls number on Friday should drive yields sharply higher on the thought that the Fed may have to start seriously considering tapering its bond purchases sooner than expected. This would be bearish for gold.

    Latest News

    Russian Ruble

    • United Arab Emirates Dirham
    • Australia Dollar
    • Canadian Dollar
    • Swiss Franc
    • Chinese Yuan
    • Danish Krone
    • Euro
    • British Pound
    • Hong Kong Dollar
    • Hungarian Forint
    • Japanese Yen
    • South Korean Won
    • Mexican Peso
    • Malaysian Ringgit
    • Norwegian Krone
    • New Zealand Dollar
    • Polish Zloty
    • Russian Ruble
    • Saudi Arabian Riyal
    • Swedish Krona
    • Singapore Dollar
    • Thai Baht
    • Turkish Lira
    • United States Dollar
    • South African Rand

    United States Dollar

    • United Arab Emirates Dirham
    • Australia Dollar
    • Canadian Dollar
    • Swiss Franc
    • Chinese Yuan
    • Danish Krone
    • Euro
    • British Pound
    • Hong Kong Dollar
    • Hungarian Forint
    • Japanese Yen
    • South Korean Won
    • Mexican Peso
    • Malaysian Ringgit
    • Norwegian Krone
    • New Zealand Dollar
    • Polish Zloty
    • Russian Ruble
    • Saudi Arabian Riyal
    • Swedish Krona
    • Singapore Dollar
    • Thai Baht
    • Turkish Lira
    • United States Dollar
    • South African Rand
    Current Rate  :
    --
    Amount
    Russian Ruble
    Available
    -- United States Dollar
    Risk Warning

    The Database of WikiFX comes from the official regulatory authorities , such as the FCA, ASIC, etc. The published content is also based on fairness, objectivity and fact. WikiFX doesn't ask for PR fees, advertising fees, ranking fees, data cleaning fees and other illogical fees. WikiFX will do its utmost to maintain the consistency and synchronization of database with authoritative data sources such as regulatory authorities, but does not guarantee the data to be up to date consistently.

    Given the complexity of forex industry, some brokers are issued legal licenses by cheating regulation institutes. If the data published by WikiFX are not in accordance with the fact, please click 'Complaints 'and 'Correction' to inform us. We will check immediately and release the results.

    Foreign exchange, precious metals and over-the-counter (OTC) contracts are leveraged products, which have high risks and may lead to losses of your investment principal. Please invest rationally.

    Special Note, the content of the Wikifx site is for information purposes only and should not be construed as investment advice. The Forex broker is chosen by the client. The client understands and takes into account all risks arising with Forex trading is not relevant with WikiFX, the client should bear full responsibility for their consequences.