Gold Fundamental Forecast – January 16, 2017

Gold futures rose on Monday in limited price action and low volume due to the U.S. bank holiday. The market was being supported by nervous traders searching for a safe haven ahead of a speech by U.K. Prime Minister Theresa May in which she is expected to discuss plans for a “hard Brexit”.

February Comex Gold futures closed at $1202.60, up $6.40 or +0.54%.

Forecast

The charts indicate that gold is in a strong uptrend and the fundamentals are starting to line up for an even bigger surge to the upside with near-term targets coming in at $1232.70 to $1258.20.

Gold is currently being supported by a number of key factors including Brexit concerns, Chinese currency pressure and worries over Donald Trump’s ability to run a government and enact all of his promised policies.

Additionally, investors may also be feeling that stocks and bonds are overvalued and ripe for a fall, which would be supportive for gold prices. Gold is getting supported by fresh liquidity that is flowing into hard assets rather than stocks and bonds.

On Tuesday, traders will have the opportunity to react to a speech from British Prime Minister Theresa May. She is expected to stoke the volatility flames by saying Britain will not seek a Brexit deal that leaves it “half in, half out” of the European Union. Additionally, she is expected to reveal her 12 priorities for the upcoming talks with the EU.

Traders are also gearing up for the upcoming inauguration of President-elect Donald Trump and his economic plans to rebuild America.

We’re looking for gold prices to be supported today. The size of the rally will be determined by the reaction in the British Pound which is expected to weaken further when PM May delivers her speech. Investors do have to be careful, however, because some of what she is going to say has already been priced into the market.