Sat. Nov 16th, 2019

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Price of Gold Fundamental Daily Forecast– Retreating from High After ADP Data

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XAUUSD (GOLD) Analysis

XAUUSD (GOLD)

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Lower global yields should continue to underpin gold prices, but gains could be limited if the U.S. Dollar doesn’t begin to weaken. It will be hard for the greenback to drop in value if most of the major currencies are also under pressure. Money is flowing into the safe-haven currencies like the Japanese Yen and Swiss Franc.

Gold Bars and Dollar

Gold is trading higher on Wednesday, but retreating from an earlier attempt to take out last week’s high at $1442.90. The market is being underpinned by another drop in U.S. Treasury yields and a weaker U.S. Dollar. However, increased demand for riskier assets may be putting a lid on prices.

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At 13:02 GMT, August Comex gold is trading $1420.40, up $12.50 or +0.88%. This is down from an intraday high of $1441.00.

The catalyst behind the price action are worries over slowing global growth and increasing expectations of easing monetary policy by the major central banks.

In the United States, the yield on the benchmark 10-year Treasury note fell to its lowest level since November 2016 on expectations of more stimulus from the major central banks, particularly the European Central Bank and the U.S. Federal Reserve. The German bund yield also hit an historical low.

Traders are driving government debt yields lower in reaction to the nominations of dovish ECB and Fed officials, who are expected to reinforce expectations of monetary policy easing.

In Europe, the European Council nominated Christine Lagarde to head the ECB. Many investors read the choice of Legarde as a signal that Euro Zone rates will remain low for the foreseeable future as the central bank tries to generate inflation and GDP growth in the area.

In the U.S., President Trump announced on Tuesday the names of two nominees to fill vacant posts on the Federal Reserve Board. Trump’s nominees, if appointed and approved, will support his view for lower interest rates.

In the U.K., Bank of England Governor Mark Carney blamed uncertainties over Brexit and trade disputes for raising the possibility the central bank will lower interest rates later this year.

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Daily Forecast

Lower global yields should continue to underpin gold prices, but gains could be limited if the U.S. Dollar doesn’t begin to weaken. It will be hard for the greenback to drop in value if most of the major currencies are also under pressure. Money is flowing into the safe-haven currencies like the Japanese Yen and Swiss Franc.

Earlier today, traders received mixed news on the jobs front. The ADP Non-Farm Employment Change report showed the private sector of the economy added 102K jobs in June. This was lower than the forecast, but higher than the upwardly revised previous report of 41K.

Today’s ISM Non-Manufacturing PMI report is the last major report before Friday’s U.S. Non-Farm Payrolls report. Due to be released at 14:00 GMT, it is expected to come in at 56.1, slightly below the previously reported 56.9. Weaker data could be bullish for gold.

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