Price of Gold Fundamental Daily Forecast – Gold Bug Liquidation Erases Last Week’s Gains

Gold futures are trading lower on Tuesday after posting a steep decline in yesterday’s session. The major events driving the price action are dampened concerns over Brexit and increasing optimism over U.S.-China Trade relations. Some traders are also starting to speculate that the Federal Reserve may put a somewhat hawkish spin on its monetary policy statement and during its post-meeting press conference.

At 10:56 GMT, December Comex gold futures are trading $1488.80, down $7.10 or -0.47%.

We’d also like to thank the overly aggressively gold bugs for chasing the market higher last week for no particular reason and now driving the market lower with their aggressive position liquidation.

Brexit

Don’t be fooled into thinking the Brexit situation has been resolved. It’s now a timing thing for investors. Pushing the delay into January 2020 allows gold traders to put more emphasis on the trade deal and the Federal Reserve. If history hold true, the UK and the EU will wait until the last minute to do anything important or constructive as the lawyers for both sides continue to get rich.

US-China Trade Talks

Investors continued to keep a close watch for fresh developments in the on-going trade negotiations. The Office of the U.S. Trade Representative continued to offer optimistic commentary saying on Monday that Washington will consider extending certain tariff exclusions on $34 billion worth of imports from China. The remark is a follow-up to last Friday’s statement that China and the U.S. are close to finalizing a phase-one deal.

Reuters also reported that U.S. President Trump said the deal with China is expected to be signed “ahead of schedule,” but did not elaborate on the timing.

There were no fresh comments from Chinese officials.

Federal Reserve

The U.S. Federal Reserve is widely expected to cut its benchmark interest rate 25-basis points on October 30. In addition to the cut, policymakers are expected to signal its intentions about future rate cuts. Financial market traders are pricing in a rate cut for this week, then a pause, followed by a rate cut for next year. How the Fed presents its case for or against a December rate cut will set the near-term tone for gold prices.

Daily Forecast

Gold is in reset mode. After having erased all of last week’s gains, it is now testing the bottom of its 2-week range. The major support zone is $1489.10 to $1471.00.