Price of Gold Fundamental Daily Forecast – Buyers May Be Seeking Protection Against Stock Market Correction

Gold futures are trading higher shortly after the cash market opening on Thursday. The market has been the strongest performer during the current holiday shortened week. A combination of technical and fundamental factors are behind this week’s rally along with the extremely thin trading volume.

Some traders are skeptical about the move because of the light volume, but recent data from the government shows that hedge funds have been accumulating gold futures contracts for at least a month, which is proven by the bullish rectangular chart pattern.

At 13:15 GMT, February Comex gold is trading $1510.40, up $5.60 or +0.37%.

Trade Deal Worries

Although it’s not being reflected in the traditional safe-haven markets like Treasurys and the Japanese Yen, there are some worries over the trade deal that could be sending investors into gold for protection.

Lingering uncertainties about the trade deal agreed by the United States and China have been boosting the appeal of safe-haven bullion.

“We haven’t heard anything concrete as far as the trade talk is concerned between the U.S. and China… Nothing has been done yet, just a lot of talks and no action really,” said Afshin Nabavi, senior vice president at precious metals trader MKS SA.

“The major focus is when and where and which terms will be included in the trade agreement,” said Jigar Trivedi, a commodities analyst at Anand Rathi Shares & Stock Brokers in Mumbai.

However, gains are likely being limited by traders who believe the trade agreement is a done deal. U.S. President Donald Trump said on Saturday that Washington and Beijing would “very shortly” sign their so-called Phase One trade pact.

Trump also said on Tuesday there will be a signing ceremony with the Chinese President Xi Jinping for the first phase of the agreement. Beijing confirmed the news by saying they were in close touch with Washington for the signing.

Another Threat from North Korea

A report that North Korea’s leader Kim Jong Un held a meeting of top military officials to discuss boosting the country’s military capability also supported gold.

However, Christmas Day came and went with no sign of the “gift” that North Korea warned could come. Earlier this month, Pyongyang set a year-end deadline for the U.S. to make new concession in talks over the country’s nuclear arsenal.

Daily Forecast

Gold is a hard read this week because of the light volume. Are hedge funds just “painting the tape” to encourage speculators to chase the market higher, or is the move being fueled by real buyers, hoping and overbought stock market corrects with a steep break?