Price of Gold Fundamental Daily Forecast – Gold Could Plunge if Trump Talks Up Dollar in Tuesday’s Speech

A slightly higher U.S. Dollar and record highs in U.S. stock indexes are helping to put pressure on gold prices early Monday. Traders will be particularly locked-in to the movement in the Greenback throughout the session because this has been the primary driver of the price action lately.

At 0806 GMT, April Comex Gold futures are trading $1350.50, down $6.70 or -0.49%.

Forecast

Gold bulls may take a breather today especially because the U.S. Dollar is technically oversold and due for a temporary short-covering rally. Additionally, they may be getting a little nervous ahead of Tuesday’s State of the Union address by President Trump, Wednesday’s U.S. Federal Reserve Monetary Policy Statement and Friday’s U.S. Non-Farm Payrolls report.

I have no doubt that Trump will take the opportunity on Tuesday night to talk up the economy and the U.S. Dollar after last week’s debacle. If you recall, last Wednesday, Treasury Secretary Steven Mnuchin trashed the dollar, fueling a deep plunge in the Greenback. Trump may have prevented another meltdown when he said he wanted a “stronger dollar.” He may come back on Tuesday with even stronger language supporting the dollar. This could trigger a massive rebound rally which should drive gold prices sharply lower.

The Fed is widely expected to leave interest rates unchanged, however, if it delivers a hawkish message about inflation and the number of future rate hikes, gold could be pressured.

Finally, investors will be watching for strong labor numbers in Friday’s U.S. Non-Farm Payrolls report, especially the Average Hourly Earnings number since this indicates inflation.

Later today, investors will get the opportunity to react to fresh economic data. The reports include the Core PCE Price Index, Personal Spending and Personal Income.

Core PCE is a key inflation indicator. It is expected to come in at 0.2%, up from 0.1%. Personal Spending is expected to rise 0.5%, down from 0.6%. Personal Income is expected to come in unchanged at 0.3%.