Price of Gold Fundamental Daily Forecast – FOMC Speakers Likely to Drive Price Action

Gold is inching higher on Tuesday after early session weakness. The price action is being manipulated by the movement in the U.S. Dollar Index. This time, the dollar isn’t strengthening because of safe-haven buying or the threat of additional rate hikes by the Fed. It’s the weaker Euro that is driving the dollar higher.

At 1137 GMT, December Comex gold is trading $1223.60, up $1.20 or +0.10%.

On Monday, the Euro rallied early in the session as traders expressed optimism in the new Brexit deal, and reports that Italy was willing to compromise with the European Union over its budget issues. But these gains were taken away after European Central Bank President Mario Draghi acknowledged slowing growth in the Euro Zone.

The Draghi news drove the Euro lower and the dollar index higher, putting pressure on dollar-denominated gold.

Gold was also pressured by comments from President Trump, who told the Wall Street Journal that he expects to move ahead with raising tariffs on $200 billion in Chinese imports to 25 percent from the current 10 percent, and repeated his threat to slap tariffs on all remaining imports from China.

Trump’s comments surprised gold investors because recent speculation showed investors were betting on a possible deal when Trump meets with Chinese President Xi Jinping at the G20 summit in Argentina later this week.

Forecast

The weakness in the Euro continued to pressure gold prices earlier today, but its influence was dampened by concerns over today’s U.S. economic reports and Fed speeches.

The Home Price Index (HPI) is important given the impact of rising interest rates. It is expected to have risen by 0.4%. The S&P/CS Composite-20 HPI is expected to have fallen from 5.5% to 5.3%. Conference Board Consumer Confidence is expected to have dropped from 137.9 to 136.2.

FOMC Members Clarida and Bostic are also expected to speak. Two weeks ago, both Fed officials drove the U.S. Dollar lower with comments about the Fed reaching neutrality.

Gold prices may catch a bid today if Clarida and Bostic continue with their somewhat dovish commentary, but gains are likely to be limited by concerns over Wednesday’s Preliminary GDP report and Fed Chair Powell’s speech. On Thursday, the Fed will release its meeting minutes. Traders are hoping the minutes reveal clues about the pace of future Fed rate hikes.

Clearly, gold needs the dollar to weaken in order to get out of its current trading range.