Price of Gold Fundamental Daily Forecast – Pence Comments May Have Spooked Weak Short-Sellers

Gold futures hit a two-week high early Friday, following through to the upside after yesterday’s surge to the upside. Some traders are saying weak U.S. economic data spurred expectations for another interest trade cut by the Federal Reserve next week. Hello…traders priced in a rate cut over two weeks ago.

At 11:01 GMT, December Comex gold is trading $1508.50, up $3.80 or +0.25%.

Maybe traders got tired of the sitting in a two-week trading range. Maybe somebody said remember the old adage, “Never short a quiet market”. The point is, there is clear reason why the market went up. I’m chalking it up to buy stops and trader frustration.

On October 11, gold formed a range of $1508.00 to $1478.00 after President Trump announced phase one of a partial trade deal between the United States and China. Gold then proceeded to trade inside this range for nine consecutive trading sessions. Today, it finally nudged through $1508.00 before stalling at $1509.09. The move smells of buy stops getting tagged.

There was little news this week on the progress being made at the trade talks. However, China was in the news on Thursday. Furthermore, if gold went up on news about China then it would have to be bad news. That brings us to U.S. Vice-President Pence and his comments on Thursday.

Yesterday, Pence delivered a speech on the future of the relationship between the United States and China. Ahead of his remarks, the market fear was that the speech would be a ‘bad cop’ speech that could derail the progress on a U.S.-China trade deal.

In prepared remarks, Pence said Washington “does not seek confrontation with China,” nor does it want to “contain China’s development.”

Still, Pence criticized Beijing’s construction of a “surveillance state,” and “increasingly provocative” military action, as well as its handling of the protests in Hong Kong, Reuters reported.

Daily Forecast

If gold rallied because of the fear that the Pence comments would offset the progress being made in the trade talks, then this surge in prices is not likely to last and the market is likely to return to its nine day range.

So far, I haven’t seen anything to suggest the Chinese didn’t like the speech. But at least we know that U.S.-China trade relations are the biggest concern for gold traders at this time.

At this time, I don’t see any evidence that the price action on Thursday and Friday suggests the start of something big in gold. Unless, of course, it involves unreported news about China and the trade deal talks.