Price of Gold Fundamental Daily Forecast – In Position to Challenge Late November Top at $1303.40

Gold was driven to its highest level since November 29 on Wednesday, rising for an eighth straight session, as further weakness in the dollar encouraged investors to buy the precious metal and other commodities. Gold is now up more than 3 percent over the last two weeks after the dollar began to weaken following the latest Fed interest rate hike on December 13.

On Wednesday, February Comex Gold settled at $1291.40, up $3.90 or +0.30%.

Despite weakening since early September, gold has managed to recover some of its fourth quarter loss and is now in a position to post a more than 10 percent gain for the year.

The U.S. Dollar has been trending lower since December 12, the day before the Fed raised interest rates for the third time in 2017, while issuing a forecast of only three rate hikes in 2018. There have been very few events to drive the dollar higher lately. Even the passage of the U.S. government’s massive tax overhaul plan last week was not helping to support the greenback.

In economic news, a drop in U.S. consumer confidence helped pressure U.S. Treasury yields on Wednesday. Consumer confidence slipped in December, down from 17-year highs in November. The Conference Board’s measure of consumer confidence declined to 122.1 in December, further than the 128.1 anticipated by economists polled by Reuters.

U.S. Home Sales stalled in November after huge climbs this fall, up 0.2 percent. The index was 0.8 percent higher compared to November 2016, the first annual gain since June. The number actually came in better than the -0.4% estimate, but lower than the previous 3.5% gain.

Forecast

February Comex gold futures are trading higher early Thursday, putting the market in a strong position to challenge the November 27 top at $1303.40. Today’s price action is being driven by a weaker U.S. Dollar and the possibility of lower U.S. Treasury yields. Gold traders will also be watching the action in U.S. equity markets. Weakening demand for higher-yielding assets will be supportive for gold futures.

On the economic front, gold traders will get a chance to react to U.S. reports on Weekly Unemployment Claims, the Goods Trade Balance, Preliminary Wholesale Inventories and Chicago PMI.

Any data that drives Treasury yields lower will be supportive for gold futures. Volume is expected to remain well-below average.