Price of Gold Fundamental Daily Forecast – Mixed Reactions to News Producing Choppy, Two-Sided Trade

Gold is trading all over the map early Tuesday with the market being supported by geopolitical concerns in the Middle East and political turmoil in Washington. Gains are being limited by increased demand for risky assets and a stronger U.S. Dollar.

At 0742 GMT, June Comex Gold is trading $1339.60, down $0.50 or -0.04%.

Gold futures reversed early gains in response to a rebound in the U.S. Dollar and firmer global equity markets. On Monday and early Tuesday, gold prices ticked up as the dollar struggled and Asian stocks faltered. Traders recovered all of its earlier losses on speculation the U.S. may step up its military response to reports of a deadly poison gas attack on a rebel-held town in Syria.

Forecast

Based on the early price action, volatility is likely to be the theme in the gold market today. Traders seem to be willing to react to any movement in stocks and the dollar today.

The underlying support is coming from concerns that the U.S. military activity in Syria is poised to escalate.

On Monday, President Trump promised quick, forceful action in response to a deadly suspected chemical weapons attack in Syria, appearing to suggest a potential military response.

According to reports, the United States plans to call for a U.N. Security Council vote on Tuesday on a proposal for a new inquiry into responsibility for use of chemical weapons in Syria after reports of a poison gas attack on a rebel-held town, diplomats said.

On the political side of the equation, late Monday, the FBI obtained a search warrant to raid the office and residence of Michael Cohen, Trump’s longtime personal lawyer. This triggered a steep break in the equity markets, driving investors into the safety of the gold market.

Furthermore, Trump is also venting against Attorney General Jeff Sessions and pondering firing special counsel Robert Mueller. Trump said that if Sessions had let him know he was planning to recuse himself from overseeing the special counsel’s investigation, he would have picked someone else for the job.

Trump also told reporters that “many people” are telling him to fire Robert Mueller.

The report that could impact the U.S. Dollar and consequently gold prices is the U.S. Producer Price Index. It is expected to come in at 0.1%, lower than last month’s reported 0.2%.

A lower than expected number could pressure the U.S. Dollar and underpin gold prices. Gold is likely to trade steady-to-lower if the PPI number is stronger than expected.

Traders should continue to expect volatility and a possible two-sided trade today in gold because we are in a news driven market.