Gold Fundamental Forecast – August 29, 2016

Gold is trading at 1329.55 with a gain of almost $5 today. Janet Yellen is expected to be slightly hawkish in her presentation today but not to committing. After the speech by Esther George yesterday, traders are expecting this to be a lead in to Yellen with a watch and wait attitude ahead of the September meeting.  Gold fell and the dollar gained on Thursday in part as at least one Fed member tightened her hawkish-leaning rhetoric. In two separate news interviews, Kansas City Fed President Esther George said a rate increase is warranted, given healthy U.S. data. “When I look at where we are with the job market, when I look at inflation and our forecast for that, I think it’s time to move.” George’s position isn’t new. A voting member of the Fed’s rate-setting committee this year, she had dissented in favor of a rate increase at the panel’s July meeting.

Gold futures crawled up from one-month lows Friday but remained on track for a weekly drop as financial markets braced for potential clues on Federal Reserve interest-rate timing when Chairwoman Janet Yellen speaks at the central bank’s Rocky Mountain retreat this morning.

In a speech scheduled for 10 a.m. Eastern, Yellen may signal the Fed is ready to raise interest rates next month, or perhaps at the group’s final meeting of the year in December, after the result of the U.S. presidential election.

The prospect for higher rates could lift the dollar, depressing the value of precious metals priced in the currency. Plus, a rate increase tends to cut demand for assets that don’t provide a yield, like gold.

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August 29, 2016

Government Bond Auctions

Date Time Country Auction

Aug 25 18:00 US Holds 7yr note auction

Aug 26 10:10 Italy Holds zero coupon