Price of Gold Fundamental Daily Forecast – Draghi Comments Will Drive the Price Action Today

Gold prices eased a little from its one-year high on Wednesday as concerns over a potential U.S. government shutdown eased and the dollar recovered late in the session against the Japanese Yen.

December Comex gold futures settled at $1339.00, up $5.50 or +0.41%.

President Trump said on Wednesday he had agreed to a three-month increase in the U.S. debt ceiling with congressional leaders. If passed by the Republican-led Congress, it would avert an unprecedented default on U.S. government debt, keep the government funded for the first three months of the fiscal year beginning October 1 and provide aid to victims of Hurricane Harvey.

U.S. Treasury yields rose on the news and gold fell as safe-haven demand among investors worried about a short-term default subsided.

In other news, the U.S. Trade Balance came in at -43.7 billion. This was better than the expected 44.6 billion.

Final Services PMI came in slightly below expectations at 56.0. ISM Non-Manufacturing PMI was 55.3, below the 55.8 estimate and 53.9 previous read.

The Fed’s Beige Book reported that the U.S. economy expanded at a moderate pace through mid-August, but there were few signs of acceleration in inflation.

Forecast

Gold is trading slightly higher early Thursday in reaction to a weaker U.S. Dollar. Gains are being limited by the easing of concerns over a potential U.S. government shutdown. Traders are also a little cautious ahead of the European Central Bank monetary policy announcement and the post-meeting press conference by ECB President Mario Draghi.

Draghi is expected to start laying the groundwork for stimulus reduction. This is only expected to give investors a few hints about what he has planned. He is not likely to make any major commitment.

A hawkish Draghi, or one that tries to talk down the value of the Euro could weigh on gold prices. A dovish Draghi should be supportive.

Gold traders are also likely to continue to monitor the situation with North Korea, which remains a wildcard. On Wednesday, President Trump warned that the United States would no longer tolerate North Korea’s actions but said the use of military force against Pyongyang will not be his “first choice.”

There is a story circulating that Trump will propose ban on crude oil to North Korea. This has the potential to cripple the rogue nation’s economy if Trump can convince other countries to support the move.

On the upside, the primary targets are $1353.00 and $1363.80. Selling pressure could drive the market into a short-term support zone at $1326.00 to $1320.40.