Price of Gold Fundamental Daily Forecast – Headline Driven Trade Deal Hope Forcing Out Speculative Longs

Today’s reaction to the news is understandable since prices rose last week when the headlines read that the trade deal negotiations had hit a snag. Although the selling pressure is strong early Monday, there are still skeptics out there who cite the lack of details from the U.S. and China officials as reasons to remain cautious about the remarks.
James Hyerczyk
Comex Gold

Gold futures are trading lower on Monday as growing hopes over a trade deal between the United States and China are weighing on gold’s appeal as a so-called safe-haven asset. Driving the price action are upbeat comments late last week by a pair of high-ranking U.S. officials close to the negotiators, and remarks over the weekend from a high-ranking Chinese official.

At 09:31 GMT, December Comex gold futures are trading $1460.40, down $8.10 or -0.54%.

Today’s reaction to the news is understandable since prices rose last week when the headlines read that the trade deal negotiations had hit a snag. Although the selling pressure is strong early Monday, there are still skeptics out there who cite the lack of details from the U.S. and China officials as reasons to remain cautious about the remarks.

The daily chart pattern reflects this tentativeness. Gold was trading $1446.20 when reports about a “snag” in the negotiations made headlines. The market was trading at $1475.50 when White House economic adviser Kudlow made bearish comments. The market is currently straddling $1460.90, or the mid-point of the trading range.

Trader reaction to $1460.90 will likely determine the direction of the gold market the rest of the session.

Some gold bugs are trying to build a case for another rally because of the turmoil in Hong Kong. However, this is not likely to be an issue unless China decides to aggressively intervene.

Last week’s remarks by Federal Reserve Chairman Jerome Powell are also weighing on prices. Powell essentially said the central bank will hold rates steady and will not cut again until there is extreme weakness in the economy.

Last week’s decision by the Reserve Bank of New Zealand is also pressuring prices. The RBNZ surprised investors by voting to keep rates on hold after the majority of traders had priced in a 25 basis point rate cut. Investors will now have to wait until February.

Weak Australian employment data helped raise the chances of another rate cut by the Reserve Bank of Australia (RBA), but not enough to put a December move on the board. The market seems to be leaning toward a February rate cut. This news is having little effect on gold prices.

Daily Forecast

As long as there is optimism over a trade deal, gold is likely to remain under pressure on Monday. The hope of a trade deal is helping to support the Euro and the British Pound, which is pressuring the U.S. Dollar.

Usually traders buy gold when the dollar goes down, but this is not the case at this time. Nonetheless, a steep plunge in the dollar could help slow down the selling pressure on gold.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US