Price of Gold Fundamental Daily Forecast – Bullish Traders Looking for Next Catalyst

Gold futures are trading slightly higher early Friday, but below yesterday’s high. The price action suggests the lack of buyers, or position-squaring in reaction to the Fed minutes which showed policymakers supported a December interest rate hike. A firmer U.S. Dollar is also keeping a lid on gold prices. Traders are also holding prices in a tight range ahead of the start of the G20 meeting in Argentina, which is loaded with uncertainty due to the lingering trade dispute between the United States and China.

At 0521 GMT, February Comex Gold is trading $1230.50, up $0.01 or 0.01%.

Gold continues to be supported by lower Treasury yields. The catalyst behind the move is Fed Chair Jerome Powell’s dovish remarks on Wednesday. Powell said he considers the Fed’s benchmark interest rate to be near a neutral level, an important distinction from remarks he made less than two months ago.

It was also a full day of U.S. economic data on Thursday. The Core PCE Price Index came in lower than expected at 0.1%. Personal Spending, however, jumped 0.6%. The previous month was revised lower to 0.2%. Personal Income also came in higher than expected at 0.5%.

Unemployment Claims fell for a third week, which could be an early sign of a weakening job market. Weekly Jobless Claims rose 234K versus an estimate of 221K. Pending Home Sales plunged 2.6%. Traders were looking for an increase of 0.8%. The previous month was revised higher to 0.7%.

Thursday’s reports will probably not change expectations that the Fed will raise interest rates next month for the fourth time this year.

The Fed minutes pointed toward the strong likelihood of another quarter-point adjustment in the central bank’s benchmark rate target next month. Fed Policymakers indicated that further post-meeting statements might be altered to remove the reference to “further gradual increases” in the target range as long as current conditions persist.

Gold is also being underpinned by geopolitical risk between Russia and Ukraine.

Forecast

February Comex Gold futures are likely to continue to be driven by the movement in the U.S. Treasury yields. With the Fed signaling fewer than three rate hikes next year, gold is catching a bid.

Later today In the U.S., FOMC Member Williams is scheduled to speak and the Chicago PMI will be released. It is expected to show a slight gain to 58.6.

The two-day G20 meeting also begins in Argentina. Traders will be focusing on the trade talks between the United States and China. Going into the meeting, gold investors probably have no expectations that a trade deal will be reached.