Price of Gold Fundamental Daily Forecast – Supported by Lower Treasury Yields, but Limited by Demand for Risk

A creeping U.S. Dollar and increasing demand for higher yielding assets helped put a lid on gold futures on Wednesday. The lack of follow-through to the upside could be signaling that the selling is greater than the buying at current price levels. Or it may just mean that buyers are taking profits in reaction to a slight rebound in the U.S. Dollar Index after reaching a multi-month low earlier in the week.

December Comex Gold settled at $1248.80, unchanged.

Forecast

Early Thursday, gold prices are trading lower in reaction to a steady U.S. Dollar. The Greenback is holding its ground as investors prepare for the latest monetary policy announcement and interest rate decision from the European Central Bank.

The ECB is expected to lay the groundwork for a shift in policy in the fall when it meets again. The central bank is expected to emphasize improved growth, but it must do so in a manner so as not to cause volatility or disrupt the financial markets.

Earlier today, the Bank of Japan kept monetary policy steady and pushed back against the timing for achieving its 2 percent inflation target.

Gold prices are likely to continue to be supported as long as weakness in the U.S. Dollar persists. However, gains could be limited if new money continues to flow into the U.S. stock markets.

On Thursday, investors will get the opportunity to react to the latest weekly unemployment claims. The report is expected to come in at 245K. The Philly Fed Manufacturing Index is expected to come in at 23.4, down from 27.6. The CB Leading Index is expected to rise 0.4%, up slightly from 0.3%. These events could move the U.S. Dollar if they deviate too much from the estimates.

Gold investors should also monitor the direction of U.S. Treasury yields. Weaker yields will be supportive for gold.