Price of Gold Fundamental Daily Forecast – Dovish Fed Minutes Should Be Bullish for Gold

Gold prices are spiking higher on Wednesday shortly before the regular session opening. Prices are being lifted by another drop in Treasury yields as investors prepare for what could be dovish U.S. Federal Reserve Monetary Policy Meeting Minutes, due to be released at 19:00 GMT. A mostly sideways U.S. Dollar versus a basket of currencies and lower demand for risky assets could also be contributing to the current strength.

At 10:49 GMT, April Comex gold is trading $1347.80, up $3.00 or +0.22%. The daily chart indicates there is room to the upside with $1356.80 the next major upside target.

The U.S. Dollar is being pressured by the drop in Treasury yields and the lifting of long hedges in reaction to hopes surrounding trade talks between the United States and China.

President Trump helped drive prices higher late Tuesday when he made positive comments about the progress of the trade talks while saying he may extend the deadline for reaching an agreement beyond the original March 1 date.

Daily Forecast

Based on the dovish comments from Fed Chairman Jerome Powell and the other policymakers, traders have reason to believe that the Fed is going to pause raising interest rates, however, they are less certain about what the central bank is going to do with the $4 trillion of bonds left on its balance sheet.

In the minutes, traders will be looking for clues as to what the central bank plans to due to affect the balance sheet. Continuing to reduce the balance sheet is a form of tightening. This could pressure gold prices. However, gold prices could rally if the minutes show policymakers discussed stopping the reduction of its balance sheet.