Price of Gold Fundamental Daily Forecast – Don’t Expect Too Much from Today’s GDP Report

Gold is inching higher for a third session this week with the buying being fueled by a weaker U.S. Dollar.

The dollar has been under pressure since the tension in Turkey eased on August 15. This news started the initial move. The selling picked up speed late last week when Fed Chair Powell may have suggested the Fed is moving toward neutrality.

At 0805 GMT, December Comex Gold is trading $1217.40, up $1.40 or +0.12%.

Additional selling pressure hit the dollar on Monday, supporting gold, after the United States announced that a trade deal had been reached with Mexico. Dollar buyers, hedging against market volatility, were forced to sell on the news. This event carried over into Tuesday’s session and is likely helping to support prices today since there isn’t any major news.

Yesterday, there was news but it didn’t have a major impact on the gold market. Right now it’s about repositioning and end-of-the-month position-squaring. As far as we know, based on government data, hedge funds and money managers are still net short gold, so we could be looking at a short-squeeze.

Forecast

The dollar is expected to remain in focus today and its direction should garner an opposite reaction by gold. Potentially driving the direction of the dollar and gold will be today’s U.S. Preliminary GDP report at 1230 GMT. It is expected to come in at 4.0%, down slightly from the previous read of 4.1%.

The problem with the GDP report is that it is preliminary and its stale data so we may not see any reaction in the gold market at all.

The other report that investors will be watching is Pending Home Sales at 1400 GMT. It is expected to show a rise of 0.3%, down from the previously reported 0.9%.