Price of Gold – Fundamental Forecast, March 27, 2017

June Comex Gold prices jumped to its highest level since February 28 early Monday. The buying was strong enough to take out last week’s high at $1256.40, putting the market in a position to challenge the February 27 top at $1268.10.

The catalyst behind the rally was a weaker U.S. Dollar. It fell as investors increased doubts that President Trump would be able to push through his economic agenda after the Republican’s failed to pass health care reform on Friday.

In other news, on Friday, the U.S. reported new orders for U.S.-made capital goods unexpectedly fell in February, but a surge in shipments amid demand for machinery and electrical equipment supported expectations for an acceleration in business investment in the first quarter.

The U.S. Commodity Futures Trading Commission said on Friday that hedge funds and money managers raised their net long position in COMEX gold after two weeks of cuts in the week to March 21.

There are no major economic reports today, but investors will get the opportunity to react to speeches from Federal Open Market Committee Members Charles Evans from the Federal Reserve Bank of Chicago and Dallas Federal Reserve President Robert S. Kaplan.

In a speech last week, FOMC Member Evans said the setting for monetary policy had improved and that the economy is on a pretty good course right now.

Evans also stated that the Fed is on track to raise interest rates twice more this year and it could be more or less aggressive depending on inflation and fiscal policies from the Trump Administration.

Based on this statement and the events last week, Evans may offer some new insight as to how he feels about the frequency of future rate hikes since there is some doubt as to whether President Trump will be able to accomplish tax reform and his aggressive spending plans in a timely manner.

The gold rally could lose traction today if Trump or the Republican House announce the start of tax reform. The faster they can get started, the faster investors will put the failed health care bill behind them.