Price of Gold Fundamental Daily Forecast – Gold Bulls Taking Advantage of Thin Holiday Trade

Gold futures are posting a higher-high for the ninth consecutive session, reaching its highest level since December 1. The catalyst behind the rally is the weaker U.S. Dollar. Volume is thin due to the holiday week so the moves may be a little exaggerated today.

At 1206 GMT, February Comex gold futures are trading $1281.90, up $3.10 or +0.24%.

In other news, hedge funds and money managers increased their bearish position in COMEX silver contracts to a record in the week to December 19, while they increased their net long stance in gold, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.

Forecast

Thin trading conditions may be one factor for the rally on Tuesday, concerns over U.S. growth prospects may be another.

Data showed on Friday that consumer spending outpaced personal income in November and the Federal Reserve’s preferred inflation measure – the personal consumption expenditures price index that excludes food and energy – rose by just 0.1 percent in November. Low inflation could diminish hopes of at least three rate hikes by the Fed in 2018.

Traders are also saying that gold prices are getting support from weaker equity and bond prices. Investors aggressively sold off positions in both asset classes after the U.S. Senate and House passed the largest sweeping U.S. tax reform bill in nearly 30 years. This strongly suggests the news may have already been priced into the market.

Furthermore, there are some concerns that tax reform may have little benefit for the economy and that it may contribute more to government debt levels.

The chart pattern suggests that strong upside momentum could drive gold prices to at least $1290.20 over the near-term. Key support today comes in at $1278.50.