Gold Riding Dollar?s Weakness
Today’s Spotlight Market
Gold futures closed higher for the fifth consecutive session ahead of Wednesday?s release of the FOMC minutes.? Many Gold traders are expecting the minutes to have more dovish internal discussions between members of the committee.? The minutes are expected to focus on weaker economic growth and very low inflation.? This could lead to the Fed pushing back its interest rate hike timeline, weakening the US Dollar even further.? ?
Fundamentals
Gold has lost much of its appeal as a defensive instrument to this point.? With the opening of meaningful diplomacy between the West and Iran, among other developments, the geopolitical landscape is less ?dangerous.?? Relative economic stability, albeit with lackluster growth, not only lessens the flight to quality demand for the metal, but slower growth means less inflationary pressure.? Physical demand for Gold has not been impressive on any front ? ETF, industrial or jewelry ? so the metal is vulnerable should the greenback reverse course.? The near-term direction of the Gold market is likely to be driven by the US Dollar more than any other factor.? The combination of disappointing economic numbers and expectations that the Fed is in no hurry to raise rates leaves the US Dollar weak with no momentum.
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