Price of Gold Fundamental Daily Forecast – Final GDP, FOMC’s Fischer Likely to Drive Price Action Today

Gold prices hit a one-month high on Wednesday amid heightened expectations that the U.S. Federal Reserve will raise interest rates before the end of the year. Rising U.S. Treasury yields helped make the U.S. Dollar a more attractive investment which lowered demand for dollar-denominated gold.

December Comex Gold settled at $1287.80, down $13.90 or -1.07%.

The main catalyst for the weakness in the gold market was hawkish remarks by Fed Chair Janet Yellen earlier in the week. On Tuesday, Yellen said it would be “imprudent” to keep rates on hold until U.S. inflation hits 2 percent. Gold traders interpreted this to mean the central bank will pull the trigger and raise its benchmark interest rate in December 2017.

Gold was also supported by a stronger U.S. Dollar. Besides higher Treasury yields, the Greenback was also supported by optimism over the release of the Trump Administration’s long-awaited tax reform plan.

The Trump Administration and U.S. Republican Party finally released its tax plan framework on Wednesday after a lengthy delay. The plan includes softer tax treatment for American companies to bring back profits they have held abroad, a process known as repatriation that is boosting shares of companies like Apple and Microsoft.

The tax reform framework would reduce the corporate rate to 20 percent, as many expected. It also proposes to create three individual tax rates and double the standard deduction.

In U.S. economic news, Durable Goods Orders showed a 1.7 percent increase in August. Traders had priced in a 0.3 percent increase. The data was supported by a 0.9 percent rise in Non-defense capital goods. Core Durable Goods Orders came in at 0.2 percent, meeting the estimate.

Pending Home Sales posted disappointing results with a -2.6 percent reading. Traders were looking for a read of -0.5 percent.

Forecast

Gold prices are going to continue to be influenced by U.S. Treasury yields, the U.S. Dollar and increased demand for risky assets. The wildcard will remain North Korea which will continue to be an issue until peace between the rogue nation and its enemies is reached.

With the wheels in motion for a possible December interest rate hike, government reports are going to take on added importance.

There is a slew of economic data today with the most important being Final GDP. It is expected to come in at 3.0%, the same as the last report.

Minor reports include Weekly Unemployment Claims, Goods Trade Balance and Preliminary Wholesale Inventories. Federal Open Market Committee Member Stanley Fischer is also expected to deliver a speech. He is an ally of Fed Chair Janet Yellen so he is likely to push her hawkish agenda. If he does then look for gold prices to weaken.