Price of Gold Fundamental Daily Forecast – Keep it Simple; Bullish Over $1800.00, Bearish Under $1795.00

Gold futures are trading flat on Tuesday after jumping to its highest level since August 5 the previous session. Ironically, this is also the day before the release of the July U.S. Non-Farm Payrolls report that came in so strong that many seasoned analysts called gold a “bear market” after prices plunged in response to the report.

At 09:50 GMT, December Comex gold futures are trading $1805.30, down $1.00 or -0.06%.

So where do we go from here, now that the gold market is essentially trading at where it closed on July 23 and July 7, for example?

You can go back even further to June 1 when gold hit a top or $1922.00 and to August 9 when gold hit a bottom at $1677.90. The midpoint of that trading range is $1800.00.

Still, the December futures pandemic low is $1460.30 and the futures contract high is 2129.60. Which puts its 50% level at about $1795.00.

So we have a market that is trading slightly above 50% of its three month range at $1800.00 and its more than one-year range at $1795.00.

If you take the 50% level and put it into words, it probably means the market is balanced or trading at a fair price.

If we agree that the news driving the price action is whether the Fed will announce early tapering of its monetary stimulus then the numbers are telling us that investors still don’t know.

If investors were confident that the Fed was going to begin tapering earlier than expected, prices would be substantially lower. To me, the way of least resistance is down because tapering is coming at some point in the futures…like it or not.

The upside side is limited, however, because I don’t see a world of massive global shutdowns and massive amounts of stimulus being pumped into the market.

Near-Term Outlook

Gold traders should monitor the price action and order flow around $1795.00 to $1800.00 over the near-term since trader reaction to this area should determine the direction of the market.

If the Fed is going to delay tapering then this area should develop into support, but gains will be limited.

If the Fed is going to start tapering then this area will become resistance.

It’s that simple in my mind.