Price of Gold Fundamental Daily Forecast – Gold Prices Could Sink if Fed is Hawkish

Gold closed lower on Tuesday despite the weaker U.S. Dollar and a steep drop in U.S. stock markets. The market is under pressure this week primarily due to a sharp rise in global interest rates. Traders were also nervous ahead of President Trump’s annual State of the Union speech, the start of the Fed’s two-day meeting and Friday’s U.S. Non-Farm Payrolls report.

April Comex Gold settled at $1340.00, down $5.10 or -0.73%.

U.S. national home prices continued their run higher in November, rising 6.2 percent annually on S&P CoreLogic Case-Shiller’s most broad survey, up from 6.1 percent in October. Another S&P Index of the nation’s 20 largest housing markets showed a 6.4 percent gain, higher than analysts had expected.

The Conference Board Consumer Confidence report came in at 125.4, well above the 123.2 estimate. The previous report was revised upward to 123.1.

U.S. government debt yields rose Tuesday after consumer confidence data beat expectations and inflation fears simmered. This news helped put a lid on gold prices.

Forecast

Gold prices are inching higher early Wednesday, mostly in response to a weaker U.S. Dollar. The market is trading inside yesterday’s range suggesting investor indecision and impending volatility.

Traders are also reacting to a slight drop in U.S. Treasury yields. Yields started to fall during President Trump’s first State of the Union address on Tuesday night.

Traders are also gearing up for a boatload of U.S. economic data as well as the release of the U.S. Federal Reserve’s interest rate decision and monetary policy statement.

U.S. reports include the ADP Non-Farm Employment Change, Employment Cost Index, Chicago PMI and Pending Home Sales.

The Fed will release its interest rate decision and monetary policy decision at 1900 GMT. It is widely expected to leave its benchmark interest rate at 1.50%. Investors will be looking to its policy statement for fresh hints on the outlook for interest rates this year.

Traders are currently anticipating as many as three rate hikes this year.

The dollar could rally and gold could weaken if the Fed’s statement is hawkish.