Price of Gold Fundamental Daily Forecast – Long Professional Traders Hoping Small Speculators Chase Market Higher

Gold touched its highest level since November 7 early Tuesday as buyers took advantage of the extremely low holiday volume to drive prices through several key resistance levels. Traders said soft economic data out of the United States and concerns about an interim Sino-U.S. trade deal lent support to the precious metal investment.

At 08:44 GMT, February Comex gold is trading $1494.80, up $6.10 or +0.41%.

Weak US Economic Data Supportive

Monday’s weak economic data suggested business investment will probably remain a drag on economic growth in the fourth quarter. This likely means the Fed will continue to hold interest rates steady. This should put pressure on the U.S. Dollar, which would boost foreign demand for dollar-denominated gold.

A weaker-than-expected U.S. durable goods report for November pushed Treasury yields a little lower early in the session. The details of the report, though, were not as soft as the headline suggested, analysts said, lifting yields off their lows.

U.S. orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, edged up 0.1% last month, with the decline in orders for machinery offsetting the surge in demand for electrical equipment, appliances, and components.

“When you go through parts of the report, you are less discouraged because all of it is defense orders, which are quite volatile,” said Stan Shipley, fixed-income strategist at Evercore ISI in New York. The so-called core capital goods orders rose by an unrevised 1.1% in October. Economists polled by Reuters had forecast core capital goods orders gaining 0.2% in November.

Worries about Health of Global Economy Underpinning Prices

Gold prices gained on Monday on low volume ahead of the holiday season, with lingering concerns about the health of major global economies supporting demand for the so-called safe-haven bullion.

“Investors are looking at political risks in the longer term … There are potential economic risks still in the majority of economies. That’s not going to go away in a hurry,” said  INTL FCStone analyst Rhona O’Connell.

The United States and China have still not signed a so-called Phase 1 trade deal and tensions in the Middle East are contributing to gold’s appeal, she added.

In other news that could cap gains, U.S. President Donald Trump said on Saturday the United States and China would “very shortly” sign the trade agreement.

Furthermore, China said on Monday it would lower tariffs on products ranging from frozen pork and avocado to some types of semiconductors next year.

While the world’s two largest economies have exchanged banter about the conditions of the trade deal, there is much room for uncertainty. Any hints of a fall-through in talks could propel gold higher, analysts say.

Daily Forecast

Gold is the only major market on the move this week. It may not be anything in the news driving prices higher either. It could just be the thin volume and the lack of a “stopper” in the market helping to fuel the upside momentum. Remember that most of the major banks, institutions and hedge funds are probably absent from the markets.

We’ve seen accumulation the past five weeks so it may be just the right time to trigger a surge to the upside. The professionals are long. Now they need the public to jump in and chase the market higher.

The trigger point for a breakout to the upside is $1495.30. The daily chart indicates there is plenty of room to the upside over this level with the next major upside target coming in at $1512.40.