Gold futures are trading flat-to-higher on Thursday supported by lower Treasury futures, but capped by increased demand for risk and a stronger U.S. Dollar. The stories traders are watching are Brexit, U.S.-China trade relations and the release of the European Central Bank minutes, due to be released at 11:30 GMT. Volume and volatility are low as many of the major players have already moved to the sidelines ahead of Friday’s U.S. Non-Farm Payrolls report.
At 10:56 GMT, June Comex gold is trading $1295.60, up $0.30 or +0.02%.
Earlier in the price week, gold found support at $1289.50, slightly above the low of the year at $1287.00 and slightly below last year’s close at $1292.40. A support base could be forming but whether it holds or not will be determined by the U.S. Dollar.
The numerous headlines on Brexit are causing confusion for traders, and according to reports, even algo driven computers. Because of this, I don’t think it’s having a major impact on gold prices
U.S.-China trade negotiations are influencing gold prices indirectly. Optimism that a trade deal is imminent is actually underpinning gold because it is weakening safe-haven demand for the U.S. Dollar.
Today’s European Central Bank (ECB) minutes could put pressure on gold if the news spooks traders into selling the Euro. At its last monetary policy meeting on March 6-7, the ECB made several major policy changes that triggered a plunge in the Euro. The ECB’s extremely dovish tone came as surprise to investors who suspect the Euro Zone economy may be in worse condition than previously suspected.
Gold prices could break sharply if the minutes reveal the details as to why the ECB acted so swiftly to announce rate hikes were on hold, while offering new stimulus measures and the Euro takes out its March bottom at 1.1177.
Finally, after the release of yesterday’s weaker-than-expected ADP private jobs report, gold traders are going to pay closer attention to Friday’s U.S. Non-Farm Payrolls. Another weak report could signal a slowing economy and this could be supportive for gold prices.