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Price of Gold Fundamental Daily Forecast – Gold Bulls Need the Dollar to Weaken, or Stocks to Plunge

The primary market driver today is expected to be the U.S. Dollar. Rising Treasury yields and a rapidly falling Euro is helping to boost the dollar. This is helping to limit foreign demand for dollar-denominated gold.

Gold is trading flat shortly before the regular session opening on Friday. The market is being underpinned by renewed political and economic concerns including China’s weak economic growth reported earlier in the session. Traders are also monitoring stock market activity which could affect gold’s appeal as a safe-haven asset. Additionally, holding on to today’s gains will produce a third straight weekly price increase.

At 1102 GMT, December Comex Gold is trading $1230.00, unchanged.

Gold traders are watching the equity markets for direction especially the Chinese stock market. Additionally, there are still lingering geopolitical risks such as rising Treasury yields, Italian budget concerns and the U.S.-China trade war.

As far as the news is concerned, overnight China reported that its economy grew 6.5 percent in the third quarter from a year earlier, its weakest pace since the global financial crisis, and missed expectations as a years-long campaign to tackle debt risks and the trade war with the United States began to bite on economic growth.

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In other news, the European Commission said on Thursday a draft 2019 budget from Italy was in “particularly serious non-compliance” with EU rules, setting the stage for a possible unprecedented rejection of the country’s fiscal plan.

Forecast

It’s a light day as far as U.S. economic news is concerned. Existing Home Sales are expected to come in at 5.29 million units, down from 5.34 million units last month. This number could have an effect on the stock market. Earlier in the week, a miss to the downside by housing starts contributed to stock market weakness.

The primary market driver today is expected to be the U.S. Dollar. Rising Treasury yields and a rapidly falling Euro is helping to boost the dollar. This is helping to limit foreign demand for dollar-denominated gold.

The key factor underpinning gold will be safe-haven buying demand. Another round of selling pressure in the stock market could send investors into the gold market for protection.

Gold traders are being cautious about playing the long side because of the mixed fundamentals. Due to rising U.S. Treasury yields, gold can’t be considered an investment because it doesn’t pay interest or a dividend.

It has become a safe-haven asset, however, because of the volatility in the stock market.

If the dollar goes up because of rising rates and a stable stock market then gold could be under pressure today.

If the dollar goes up because of safe-haven buying then gold could also increase because of safe-haven demand.

This article was originally posted on FX Empire

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