Price of Gold Fundamental Daily Forecast – Gloomy Fed Officials May Have Greenlit Next Rally

Gold futures are edging higher for a fourth straight session on expectations of more stimulus from the Federal Reserve to combat the likely economic blow from the resurgence of COVID-19 cases.

The U.S. coronavirus outbreak crossed a grim new milestone of over 3 million confirmed cases on Tuesday as more states reported record numbers of new infections, and Florida faced an impending shortage of intensive care unit hospital beds, Reuters reported.

At 09:28 GMT, August Comex Gold is trading $1811.20, up $1.20 or +0.07%.

Meanwhile, lockdown measures were reimposed in Australia’s second-biggest city, Melbourne, as officials scramble to prevent a second-wave pandemic.

However, the big story of the day and the main catalyst behind the strength in gold on Tuesday were the comments from Fed officials. Three Fed policymakers expressed concern that the surge in infections threatens to pinch consumer spending and job gains just as some stimulus programs are set to expire. One Fed official even pledged more support ahead from the U.S. central bank.

Fed’s Mester Says Economic Growth ‘Leveling Off,’ Sees More Help Needed

Cleveland Federal Reserve President Loretta Mester said activity is slowing in her region due to rising coronavirus cases, and she sees more policy help necessary to help the economy through the pandemic, CNBC reported.

Speaking to CNBC in a live interview Tuesday, the central bank official echoed comments from her Atlanta counterpart, Raphael Bostic, who also said he sees a rougher road to recovery.

“I think we’re seeing the same thing,” Mester said on “Closing Bell.” “We saw a reopening in May and activity starting to come back pretty well. Over the past week or so, there’s been some leveling off, and I think it’s probably due to the increase in cases not only in Ohio but across the country.”

Fed’s Bostic:  Business ‘Getting Nervous Again’ as Virus Surges

The surge in U.S. coronavirus cases has made business owners “nervous again,” Atlanta Federal Reserve Bank President Raphael Bostic said on Tuesday, and prompted him to focus on company decisions over the next three to six weeks, Reuters reported.

“We are hearing it more and more as we get more data. People are getting nervous again. Business leaders are getting worried. Consumers are getting worried. And there is a real sense this might go on longer than we have planned for,” Bostic said in webcast remarks to the Tennessee Business Roundtable.

Daily Forecast

Gold is grinding higher, which is a good thing, because too often speculators have rushed in, triggering a spike to the upside that blows out the perceived bullishness. This time, the rally looks different. However, that doesn’t mean we won’t see a price spike and that could happen as early as Thursday following the release of the Weekly Jobless Claims report.

I think the Fed officials were spot on in suggesting the economy is leveling off and business leaders are getting nervous. Thursday’s initial claims should show a surge in people applying for state unemployment benefits and this should light the fuse from a strong rally.

Like I wrote over the weekend, last Friday’s Non-Farm Payrolls report is probably going to be the best labor market news for months.

For a look at all of today’s economic events, check out our economic calendar.