Gold Fundamental Forecast – January 23, 2017

Gold futures see-sawed after President Donald Trump’s inauguration speech on Friday before settling higher for the session. The market begins the week at an important crossroad on the charts that will determine whether prices continue to move higher, or begin to retreat.

April Comex Gold futures closed at $1207.70, up $0.50 or +0.04%.

Forecast

If buyers continue to support gold today, then they are likely to do two things. One, support the recent bottom at $1198.10 and take a run at last week’s high at $1221.80.

A move through $1221.80 will signal a resumption of the uptrend. This would set up the market for a possible rally into $1235.60 to $1261.10.

If $1198.10 fails as support then the trend will change to down and the market will start an eventual correction back to $1174.50 to $1163.30.

Overall, this is what investors will be facing and this is what the next move in gold will be based on. If Trump comes out and presents a presidential tone and his main focus shifts to fiscal spending, tax cuts and relaxed regulations – basically his campaign promises – then gold is likely to feel downside pressure. This is because of the previously mentioned items are considered inflationary and rising inflation will mean higher interest rates and a stronger U.S. Dollar.

If Trump continues to act petty and his tone remains divisive then investors will develop a lack of confidence in his ability to run the country. If this is the case then all of those inflationary ideas will be cast aside and delayed, making gold a more attractive investment.

The direction of gold prices over the near-term will be determined by which way Trump decides to present himself. If he decides to cooperate with his detractors to get things done that will improve the country then gold will be pressured. If he decides that it’s his way or the highway then gold will continue to be underpinned because investors will seek protection because they will sense his failure as a leader.