Price of Gold Fundamental Daily Forecast – Needs Weaker Dollar to Overtake Resistance at $1205.90

Gold futures inched a little higher early in the session on Wednesday before settling into a trading range ahead of the release of the Fed’s latest meeting minutes at 1800 GMT. The trade is a little tentative as investors also show respect for a key technical resistance zone at $1205.90 to $1215.10.

At 0723 GMT, December Comex Gold futures are trading $1200.20, up $0.20 or +0.02%.

The catalyst underpinning gold is a weaker U.S. Dollar, which has traded sideways to lower since President Trump criticized the Fed late Monday. Additionally, developments in U.S. politics, which saw Trump’s former personal lawyer Michael Cohen plead guilty in federal court, are also weighing on the dollar.

Traders may also be sitting on the sidelines ahead of the central bankers’ symposium at Jackson Hole, Wyoming later in the week. The start of low level trade talks between the United States and China may also be limiting the trade although these talks are not expected to yield any major results.

Forecast

Barring any surprises, gold prices are likely to remain in a tight trading range today until the release of the Fed minutes at 1800 GMT. Traders will be looking for clues to solidify bets on at least two more rate hikes this year, but they will also be watching the outlook for interest rates next year.

The most recent minutes released in July from the June meeting revealed that committee members “offered their views about how much additional policy firming would likely be required,” but the account didn’t provide a summary of what those views were.

Although the Fed is moving aggressively towards neutral, there are still questions about what the Fed will do once it reaches neutral status. This is what investors will be looking for in today’s minutes and this is what could move the markets late in the session.

Dovish minutes could set in motion a series of events that could underpin gold prices. If the Fed comes across as weak toward future rate hikes, then Treasury yields could fall, making the dollar a less attractive investment, while driving up foreign demand for dollar-denominated gold.

Keep in mind that government data as of August 14 showed hedge funds and money managers holding record short positions in gold. They could be over-sensitive to weaker dollar which could spike prices to the upside.

Hawkish Fed minutes could potentially be bearish for gold, but only if the U.S. Dollar rallies.