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Price of Gold Fundamental Daily Forecast – Fed Minutes May Influence Price Action if Extremely Hawkish

By:
James Hyerczyk
Published: Nov 22, 2017, 07:38 UTC

Gold prices recovered slightly from Monday’s sharp sell-off. The move was led by a weaker U.S. Dollar, which retreated on position-squaring and

Comex Gold Brick

Gold prices recovered slightly from Monday’s sharp sell-off. The move was led by a weaker U.S. Dollar, which retreated on position-squaring and profit-taking ahead of Wednesday’s minutes of the Federal Reserve meeting held in November.

The market was also supported by flight-to-safety buying related to concerns over a political crisis in Germany, Europe’s largest economy.

Gains may have been limited by increased appetite for higher-risk assets.

December Comex Gold futures settled at $1281.70, up $6.40 or +0.50%.

Comex Gold
December Comex Gold

U.S. home sales grew more than expected in October as hurricane-related disruptions dissipated, but a lingering shortage of houses continued to make homes unaffordable for some first-time buyers.

The National Association of Realtors said on Tuesday that existing home sales rose 2.0 percent to a seasonally adjusted annual rate of 5.48 million units last month. September’s sales pace was revised down to 5.37 million units from the previously reported 5.39 million units. Economists were looking for a 0.7 percent rise to 5.42 million-unit rate in October.

Late Tuesday, Fed Chair Janet Yellen said on Tuesday that the Federal Reserve is “reasonably close” to its goals and should keep gradually raising the U.S. interest rates to avoid the dual pitfalls of letting inflation drift below target for too long, and of driving unemployment down too far.

Forecast

Gold futures are trading slightly lower early Wednesday in a limited trade. The market is basically mirroring the price action in the U.S. Dollar. At 0722 GMT, December Comex Gold futures are trading $1280.60, down $1.10 or -0.09%.

If the early trade is any indication, today is likely to feature below average volume and below average volatility. This should come as no surprise since Thursday is a U.S. bank holiday. Many major players will be on the sidelines today which makes the market susceptible to wild price swings.

During the U.S. trading session, investors will get the opportunity to react to the latest data on Durable Goods, Weekly Unemployment Claims and Revised University of Michigan Consumer sentiment. These reports could move gold prices if their changes are dramatic enough to impact the direction of the U.S. Dollar.

Core Durable Goods Orders and Durable Goods Orders are expected to show a 0.4% increase. Weekly Unemployment Claims will be released a day earlier because of the holiday. It is expected to come in at 241K. Revised University of Michigan Consumer Sentiment is expected to rise slightly to 98.2.

The Fed minutes from its November meeting will be released at 1900 GMT. They could provide signals on U.S. monetary policy. The Fed rate hike in December is roughly priced in and unless they are extremely hawkish, investors will be looking for more information on the timing and frequency of future rate hikes in 2018 and 2019.

Prices are likely to be rangebound today, however, we could see a breakout in either direction if the economic data is well outside the estimates or the Fed comes out as extremely bullish or bearish. Look for a bullish tone to develop on a sustained move over $1283.60 and a bearish tone to develop on a sustained move under $1280.30.

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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