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Price of Gold Fundamental Daily Forecast – Direction Determined by Treasury Yields, Demand for Risky Assets

By:
James Hyerczyk
Published: Sep 22, 2017, 06:06 UTC

Gold futures hit its lowest level in nearly four weeks on Thursday with traders reacting to the sharply higher U.S. Dollar from the previous session. The

Comex Gold Brick

Gold futures hit its lowest level in nearly four weeks on Thursday with traders reacting to the sharply higher U.S. Dollar from the previous session. The tone of the market is bearish in response to a hawkish Federal Reserve.

December Comex Gold finished the session at $1294.80, down $21.60 or -1.64%.

Comex Gold
Daily December Comex Gold

Additional headwinds for gold over the near-term include healthcare legislation, tax reform and repatriation. All three events mean economic growth and possibly higher interest rates and a higher U.S. Dollar. These factors should put pressure on dollar-denominated gold.

In other news, U.S. Vice President Mike Pence on Thursday urged fellow Republicans to get behind the party’s “last best chance” to repeal and replace Obamacare as congressional leaders scrambled to secure enough support ahead of a planned vote next week.

Weekly Unemployment Claims unexpectedly fell last week, but the data continued to be influenced by Hurricanes Harvey and Irma. Initial Claims for state unemployment benefits declined 23,000 to a seasonally adjusted 259,000 for the week-ended September 16, according to the Labor Department. Economists were looking for claims to rise 309,000. It was the 133rd straight week that claims remained below the 300,000 level, which is a sign of a robust labor market.

The Philadelphia Fed said Thursday its manufacturing index rose to a reading of 23.8, a three-month high, from 18.9 in August. Economists were looking for a reading of 18. The number indicated manufacturing conditions in the mid-Atlantic region accelerated in September and suggested the economy is picking up steam.

U.S. house prices rose in July, up 0.2% from the previous month, according to the Federal Housing Finance Agency (FHFA) seasonally adjusted monthly House Price Index (HPI). The previously reported 0.1% increase in June remained the same.

The CB Leading Economic Index increased 0.4 percent in August to 128.8, following a 0.3 percent increase in July, and a 0.6 percent increase in June.

“The August gain is consistent with continuing growth in the U.S. economy for the second half of the year, which may even see a moderate pick up,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board.

Forecast

Gold prices are going to continue to be influenced by the direction of U.S. Treasury yields and demand for higher risk assets. Prices are likely to continue to fall if yields continue to rise as well as U.S. stocks. However, any geopolitical events that trigger a move into lower risk assets should help gold prices to recover.

On Friday, investors will get the opportunity to react to the latest data on Flash Manufacturing PMI and Flash Services PMI

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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