Fundamental Forecast for Gold: Neutral

Gold prices are poised to close higher for the fifth consecutive week with the precious metal up more than 2.6% to trade at 1286 ahead of the New York close on Thursday. The advance comes amid softness in broader risk assets with global equity markets suffering minor losses ahead of the extended holiday weekend.

Comments made by President Donald Trump regarding overvaluation in the greenback further fueled the advance, taking prices through key regions of resistance on Wednesday. Despite the president’s comments, the markets seemed primed for the upcoming Fed normalization (3 additional hikes this year) and from a fundamental standpoint, the long-USD argument may be nearing exhaustion in the interim. The DXY is down more roughly 1.6% on the year and more than 3% off the yearly high. That said, while the risk does remain for further dollar losses near-term, the knee-jerk trump rally in gold is unlikely to sustain prices at these levels and leaves the immediate advance vulnerable heading into next week.

However it’s important to note that rising geo-political tensions may put a floor under prices amid the clear and present danger of mounting conflicts in Korea, Syria & Russia. Aside from these risks, highlighting the economic docket next week will be the release of the Fed’s Beige Book with an updated assessment of the central bank’s twelve districts likely to fuel speculation of the timing for the pace of future rate hikes.