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James Hyerczyk
Comex Gold Brick

Gold had a volatile session on Wednesday. Early in the day, the market was driven into a 2 ½ month low after reports that Republican senators told President Trump that they favored Stanford University economist John Taylor as the next head of the U.S. Federal Reserve.

December Comex Gold settled at $1279.00, up $0.70 or +0.05%

The news drove up U.S. Treasury yields which also helped underpin the U.S. Dollar. The stronger dollar pressured demand for dollar-denominated gold.

The market turned around late in the session and was able to close slightly higher after a steep drop in U.S. equity markets sent investors into the safety of gold.

In other news, Core Durable Goods Orders rose 0.7% and Durable Goods Orders rose 2.2%. Traders were looking for an increase of 0.5% and 1.0 percent respectively.

The Commerce Department said on Wednesday non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 1.3 percent last month after an upwardly revised 1.3 percent increase in August.

The government also said it was unable to isolate the effects of Hurricanes Harvey and Irma on the data as the survey is “designed to estimate the month-to-month change in manufacturing activity at the national level and not at specific geographic areas.”

The Home Price Index rose 0.7% versus a 0.4% estimate and New Home Sales jumped to 667K units versus a 555K estimate. The rise in new home sales was a surprise as sales hit their highest level in nearly 10 years.

Daily December Comex Gold

Forecast

Gold prices are creeping higher early Thursday in reaction to a weaker U.S. Dollar. The dollar is drifting lower ahead of a major European Central Bank monetary policy decision later in the day.

The ECB is expected to cut back on its bond-buying stimulus, moving closer toward unwinding years of loose monetary policy. Traders believe the ECB is going to come across as hawkish so the dollar could decline, sending gold higher if the central bank delivers what investors are anticipating.

We can also conclude that a dovish ECB will be a surprise. This news will send the dollar higher and gold prices plunging.

Gold traders will also be paying close attention to U.S. Treasury yields and U.S. equity markets. Falling yields and follow-through selling in the stock market should send investors into the safety of the gold market.

Today’s economic news includes Weekly Unemployment Claims, the Goods Trade Balance, Preliminary Wholesale Inventories and Pending Home Sales.

We continue to anticipate volatility due to Trump’s pending announcement of the next Fed Chair, uncertainty over the ECB announcement, and appetite for risk.

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