Price of Gold Fundamental Daily Forecast – Could Find Support if Retail Sales Disappoint

Gold futures retreated on Monday but remained close to its two-month high. The precious metal was pressured by a strengthening U.S. Dollar which made the dollar-denominated asset more expensive to foreign buyers. The market was also pressured by increased demand for higher-risk assets. The risk-on session was fueled by a slight easing of tensions between the United States and North Korea.

December Comex Gold futures settled at $1290.40, down $3.60 or -0.28%.

Worries began to ease over the week-end after Secretary of State Rex Tillerson and U.S. Secretary of Defense James Mattis published a commentary piece in The Wall Street Journal stating that the current U.S. administration would continue to pursue diplomatic resolutions with North Korea. They said, “The U.S. has no interest in regime change or accelerated reunification of Korea.”

Investors returned to higher yielding assets on Monday on rumors of a Russia-China plan to diffuse the escalating conflict between the United States and North Korea. The two countries are hoping to get North Korea to stop its missile testing while asking South Korea and the U.S. to scale back its military exercises.

There were no major reports on Monday, but a comment from New York Fed President William Dudley also pressured gold. He said the Fed could raise rates later this year.

Forecast

Gold prices are trading lower early Tuesday as investors continue to react to the easing of tensions between the United States and North Korea.

Although money is leaving the safe haven asset and flowing back into the stock market, losses could be limited because of concerns over the direction of U.S. interest rates.

The current sell-off represents investors selling off a portion of their positions related to last week’s flight-to-safety rally. Investors are still holding positions related to whether the Fed raises interest rates later this year.

Additionally, there is also a report surfacing saying that North Korean leader Kim Jong Un received a report from his army on its plans to fire missiles towards Guam and said he will watch the actions of the United States for a while longer before making a decision, the North’s official news agency said on Tuesday.

If this report prompts a reaction from President Trump then gold could attract buyers.

The key area to watch today for gold investors is $1277.60 to $1272.80. So far, we’ve seen a normal pullback in an uptrend. Trader reaction to this zone will tell us if buyers are returning, or if sellers are gaining control.

The key report today is U.S. Retail Sales. This is followed by minor reports such as the Empire State Manufacturing Index, Import Prices, Business Inventories and the NAHB Housing Market Index.

Core Retail Sales are expected to grow 0.3%. Retail Sales are also forecast at 0.3%. A stronger number will be bearish for gold. A weaker number will reduce the chances of a Fed rate hike. This could be supportive for gold.