Price of Gold Fundamental Daily Forecast – Bullish if Average Hourly Earnings Miss Forecast

Gold prices rose on Thursday in response to the lower U.S. Dollar. Rising security concerns created by tensions on the Korean peninsula also supported the bullish sentiment.

December Comex gold futures settled at $1322.20, up $8.10 or +0.62%.

The dollar fell as U.S. Treasury yields declined in response to weak U.S. economic data which greatly reduced the chances for a Fed rate hike later this year.

Geopolitical tensions remained at the forefront as investors continued to monitor the situation between North Korea and South Korea. Earlier in the week, North Korea fired a missile over Japan. That was followed two days later by South Korea’s air force conducting an exercise with two U.S. nuclear-capable bombers above the Korean peninsula on Thursday.

Gold was under pressure early Thursday as traders continued to respond to Wednesday’s better-than-expected U.S. Preliminary GDP report. However, it began to turn up after disappointing U.S. economic data raised doubts over the Federal Reserve’s ability to raise interest rates later this year.

U.S. consumer spending rose slightly less than expected in July, coming in at 0.3%. Personal income came in at 0.4%, slightly better than forecast. Weekly unemployment claims were 236K, slightly below the 237K estimate. The Challenger Jobs Cuts was 5.1%

Annual inflation increased at its slowest pace since late 2015. The so-called core personal consumption expenditures increased 1.4 percent in July on a year-over-year basis. The core PCE is the Federal Reserve’s preferred measure of inflation, and it’s lagging the central bank’s 2 percent target.

Pending home sales were also a big disappointment, coming in at -0.8%. Traders were looking for a 0.4% read.

At the end of the session, market expectations for a December rate hike were just 31 percent, according to the CME Group’s FedWatch tool.

In other news, Treasury Secretary Steven Mnuchin told CNBC on Thursday that the Trump Administration has a “very detailed” tax plan, adding they expect to push it through before year-end.

Mnuchin also suggested on CNBC that a weaker dollar might have advantages for U.S. trade. Additionally, he said that tropical storm Harvey which ravaged Texas could bring forward the deadline by which the nation’s debt ceiling needs to be raised.

Forecast

Gold prices are trading higher early Friday, putting the market in a position to breakout over this week’s high at $1331.90. The daily chart shows there is plenty of room to the upside with $1353.00 the next major target.

On Friday, investors will have the chance to react to a mountain of U.S. economic data. The major reports are Non-Farm Payrolls and ISM Manufacturing PMI.

The NFP report, due to be released at 1230 GMT, is expected to show the economy added 180,000 jobs in August. The unemployment rate is expected to remain the same at 4.3% and Average Hourly Earnings are expected to increase 0.2%.

ISM Manufacturing PMI will be released at 1400 GMT. It is expected to come in at 56.5.

Any misses to the downside in the NFP report, especially average hourly earnings, will be bullish for gold.

Gold is likely to weaken if the headline number comes in north of 209,000, or if average hourly earnings increase by more than 0.2%.