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Price of Gold Fundamental Daily Forecast – Gold Traders Like Fed Won’t Commit Until They See Jobs Data

By:
James Hyerczyk
Published: Aug 3, 2021, 09:13 UTC

Without the Fed to steer the ship, gold traders are going to have to rely on a combination of economic reports and Fed speakers for guidance.

Comex Gold

In this article:

Gold futures are edging lower on Tuesday, but volume remains too low to move the needle much. The current tight trading range suggests some of the bigger players have already moved to the sidelines ahead of Friday’s U.S. jobs report. With the Federal Reserve not scheduled to meet until September 21-22, traders are likely to show a strong response to the report.

At 08:41 GMT, December Comex gold futures are trading $1814.20, down $8.00 or -0.44%.

Without the Fed to steer the ship, gold traders are going to have to rely on a combination of economic reports and Fed speakers for guidance. Combined with the low volume, this could cause periodic episodes of heightened volatility.

The December futures contract is currently trading at a level it traded at on June 16, the same day the Fed moved up the timeline for its next rate hike. This tells me that gold traders don’t have a strong opinion either way about the next move by the Fed. This supports my assessment that we’re looking at a rangebound trade over the near-term.

Traders Sensitive to the Headlines

Last Wednesday and Thursday, gold rallied $41.90 when Fed Chairman Jerome Powell made dovish remarks suggesting the Fed was a long way from raising interest rates. On Friday, the market dropped $24.40 on weak PCE inflation data. On Monday, gold closed higher after the US Manufacturing PMI report came in lower-than-expected.

Do you see the pattern?

Fed Speakers Scorecard

Dovish: The Federal Reserve needs to see more improvement in the pandemic-hammered U.S. labor market before pulling back on support for the economy, Fed Governor Lael Brainard said on Friday, adding that she’ll be more confident in judging that progress once she has September data in hand.

Hawkish with conditions:  Fed Governor Christopher Waller on Monday said the central bank could start to reduce its support by October if the next two monthly jobs reports each show employment rising by 800,000 to 1 million, as he expects. There’s “no reason” to go slow on tapering, Waller added.

Dovish with conditions:  Minneapolis Federal Reserve Bank President Neel Kashkari said on Sunday that concerns about the spread of the contagious Delta variant could slow the U.S. labor market recovery.

Daily Forecast

Federal Reserve members, led by their leader Jerome Powell, have made it extremely clear in stressing the importance of the labor market data so it comes as no surprise that gold traders aren’t willing to take a major position in front of Friday’s report.

The Fed’s next scheduled meeting is September 21-22. Before that meeting, Federal Open Market Committee (FOMC) members will have had a chance to look at two Non-Farm Payrolls and Consumer Inflation reports. Since inflation concerns have been downplayed, the jobs report is likely to set the tone in the gold market over the near-term.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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