Price of Gold Fundamental Daily Forecast – Gold Gaps Higher on Heightened North Korean Concerns

Gold prices soared to their highest level since November 2016 in reaction to lower U.S. Treasury yields, a weaker U.S. Dollar and lower demand for higher risk assets. Further supporting gold was geopolitical uncertainty over the North American Free Trade Agreement, which is being renegotiated by the U.S., Canada and Mexico.

December Comex Gold futures settled at $1315.30, up $17.40 or 1.34%.

In other news, according to the U.S. Commodity Futures Trading Commission, speculators raised their net long position in COMEX gold for the sixth straight week in the week to August 22.

Dollar-denominated gold futures spiked to the upside after the U.S. Dollar Index futures plunged to its lowest level in about 16 months as investors continued to react to speeches from U.S. Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi on Friday at the central Bankers’ conference at Jackson Hole, Wyoming. The Greenback was also pressured by concerns over the economic damage caused by Hurricane Harvey.

Investors continued to focus on the Euro because next week the ECB is expected to announce plans to begin reducing its current stimulus package at its September policy meeting.

At Jackson Hole last Friday, Draghi did not seem to be overly concerned with current Euro levels, which basically gave investors permission to drive the Euro higher.

In her speech at the Jackson Hole symposium, Yellen did not mention monetary policy, lowering expectations for a Fed rate hike later this year.

The dollar also weakened after Hurricane Harvey and the accompanying rain storm paralyzed Houston, Texas, the nation’s fourth-biggest city. The continuous rain pour has not allowed officials to assess total economic damage yet, but it is expected to be in the billions of dollars. Current conditions have primarily affected the oil and petrochemical industries.

Forecast

December Comex Gold prices gapped higher on Tuesday after North Korea launched a missile that flew over Japan. This led to heightened security in the region.

Now that gold has cleared the $1307.00 resistance hurdle, the daily chart indicates it has room to run to the November 9, 2016 main top at $1353.00. This top was made shortly after President Trump upset Democrat Hillary Clinton in the presidential election.

The next move by the major players in the region:  North Korea, South Korea and China will determine the strength of the current rally. The United Nations, the United States and Russia may also weigh in on the matter.

In general, safe haven buying of gold will continue if North Korea launches another missile. In the meantime, prices will be underpinned until the situation is contained.