Price of Gold Fundamental Daily Forecast – Increased Demand for Risk Pressuring Gold

Comex gold prices fell on Tuesday after reaching a one-month high the previous session. The precious metal was pressured by increased demand for higher risk assets and position-squaring ahead of Wednesday’s U.S. Federal Reserve interest rate decision and monetary policy statement.

December Comex Gold futures settled at $1258.50, down $2.20 or -0.17%.

Some of the selling was related to a bearish technical chart pattern. On Monday, gold posted a higher-high, lower-close which usually indicates the selling is greater than the buying at current price levels. The market also attracted sellers inside a key resistance zone identified as $1258.30 to $1269.40. Trader reaction to this zone will likely determine the near-term trend of the market.

Forecast

Gold investors are looking for clarity from the Fed. On one hand, Treasury yields and the U.S. Dollar are under pressure on the thought of a weakening economy. This is helping to underpin gold prices. However, the stock market keeps moving higher and the increased demand for higher risk is capping gold prices and pushing the market lower.

In my opinion, something has to give to trigger a breakout to the upside by gold.

Gold could see some support on Wednesday depending on what the Fed says. It’s a July Fed meeting so investors may not get as much from the central bank as they would from a quarterly monetary policy statement.

Investors aren’t expecting the Fed to raise rates at this meeting, but they will be looking for hints on the timing and extent of future moves.

The gold market may be supported if U.S. President Trump’s economic stimulus and tax reform agenda continues to face headwinds, but only to the extent that it pressures Treasury yields and the U.S. Dollar.

At this time, gold is being seen as a hedge against uncertainty. Until gold is treated like an investment, I don’t see much upside potential, given the basic fundamentals. I only see it moving sharply higher if there is a major geopolitical event, something major from Washington or a huge stock market sell-off.

Look for a bullish tone to develop on a sustained move over $1269.40 and a bearish tone on a sustained move under $1258.30.