Fundamental Forecast for Gold: Neutral
Gold prices snapped a four-week losing streak with the precious metal up nearly 2% to trade at 1301 ahead of the New York close on Friday. The advance comes alongside continued strength in broader equity markets and with the DXY turning from key technical resistance this week.
Minutes released from the latest FOMC policy meeting highlighted ongoing concerns within the committee that the current subdued inflationary outlook may in fact not be a transitory event. The subsequent release of the U.S. Consumer Price Index (CPI) further emphasized these concerns with both the headline and core rate of price growth missing consensus estimates. With soft inflation continuing to plague the central bank’s exit strategy, gold may continue to benefit as the dollar is likely to remain under pressure.
Heading into next week, traders will be lending a keen ear to slew of central bank rhetoric with FOMC voters William Dudley, Robert Kaplan, Patrick Harker and Fed Chair Janet Yellen slated for remarks. For gold prices, while the broader focus remains constructive, the risk remains for a near-term pullback in price.
