Price of Gold Fundamental Daily Forecast – FOMC Begins Meeting, Trumps Speaks to U.N. On North Korea

December Comex Gold futures are trading relatively flat early Tuesday after taking a plunge on Monday. The market is currently straddling a key technical retracement level at $1312.30, slightly above a bottom at $1302.30. The price action suggests buyers are coming in to defend the uptrend.

Gold is inching higher as the U.S. Dollar gave back some of its gains from Monday. The main focus for traders is the start of a two-day Federal Reserve meeting that begins today.

During this current “risk on” environment, U.S. Treasury yields are rising, making the U.S. Dollar a more attractive investment and making dollar-denominated gold a less-desirable asset. Money is also flowing into the higher-risk, higher-yielding stock market.

Forecast

On Tuesday, the Federal Open Market Committee begins its two-day meeting. The U.S. central bank is widely expected to leave its benchmark interest rate unchanged and announce plans to trim its balance sheet.

Traders will also be watching for clues on the timing of the Fed’s next interest rate hike as these tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.

Prices are likely to remain under pressure into tomorrow’s FOMC meeting. However, we still have to watch for position-squaring, profit-taking or short-covering late today.

In other news, geopolitical events could bring volatility into the marketplace. President Trump is set to speak for the first time before the U.N. General Assembly meeting on Tuesday about the ongoing rifts between the United States and North Korea.

Additionally, the U.S. military staged bombing drills with South Korea over the Korean peninsula and Russia and China began naval exercises ahead of the U.N. meeting where North Korea’s nuclear threat is likely to loom large.

For chart-watchers, the key level to watch is $1312.30. Trader reaction to this level will set the tone for the day.