Price of Gold Fundamental Daily Forecast – Looking for Volatility as US-China Headlines Dominate

Gold futures are trading nearly flat as investors await the release of U.S. consumer inflation data in a short while and the start of U.S.-China trade talks later in the day. On Wednesday, gold futures rallied as Fed members saw increased downside risks to the economy. This news drove Treasury yields sharply lower as traders placed the chances of an October Fed rate cut to 93.5%. The move also made the U.S. Dollar a less-desirable investment, while increasing demand for dollar-denominated gold.

At 11:47 GMT, December Comex gold is trading $1513.00, up $0.20 or +0.01%.

Fed Sees Downside Risks to Economy

The Fed minutes showed that trade was the overriding concern for policymakers, increasing the chances of a rate cut. Members repeatedly expressed concerns about the impact tariffs were having on business activity.

Members said that while they saw U.S. growth as generally solid, the forecast risks “were tilted to the downside.”

“Important factors in that assessment were that international trade tensions and foreign economic developments seemed more likely to move in directions that could have significant negative effects on the U.S. economy than to resolve more favorably than assumed,” the minutes said.

“In addition, softness in business investment and manufacturing so far this year was seen as pointing to the possibility of a more substantial slowing in economic growth than the staff projected. The risks to the inflation projection were also viewed as having a downward skew, in part because of the downside risks to the forecast for economic activity,” the summary continued.

Officials also noted that “a clearer picture of protracted weakness in investment spending, manufacturing production, and exports had emerged” and members also were watching the yield curve inversion, a reliable indicator that a recession is ahead.

Trade Talk Volatility

Gold prices rallied early in the session on a report from the South China Morning Post that said the U.S. and China made no progress in their deputy-level trade talks and that high-level trade negotiations including Chinese Vice Premier Liu He would be cut to one day.

Prices retreated from their highs on a report that the U.S. was considering an agreement to suspend next week’s tariff increase in exchange for a currency pact.

Daily Forecast

Gold trader focus is largely attuned to global trade developments after a flurry of reports triggered a two-sided reaction in the market overnight. The primary worry for investors ahead of the start of trade negotiations is that China may cut the talks short and leave after one day. A report from the South China Morning Post on Thursday said that Beijing’s Vice Premier Liu He could leave Washington on Thursday, rather than Friday as initially scheduled.

However, this story was offset by a report from Bloomberg News that the U.S. was considering an agreement to suspend next week’s tariff increase in exchange for a currency pact.

All this means is too expect volatility because headlines are likely to be coming out all day.

On the data front, the latest weekly jobless claims figures and consumer price index (CPI) data for September will be released at around 12:30 GMT. The consumer inflation data could have an impact on Fed policy.