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Price of Gold Fundamental Daily Forecast – NFP Report Likely to Take Backseat to Trade Deal Developments

As far as today’s Non-Farm Payrolls report is concerned, the headline number will have to completely miss the estimate to shake up the gold trade. With the Fed not expected to make a move on rates until perhaps March 2020, the main focus for gold traders will be on the trade deal.
James Hyerczyk
Comex Gold

Gold is edging lower on Friday ahead of the release of the U.S. Non-Farm Payrolls report at 13:30 GMT. Nonetheless, the market is still in a positon to finish higher for the week as a combination of weaker-than-expected U.S. economic data and increased uncertainty over the timing of a U.S.-China trade deal weighs on Treasury yields and demand for risky assets. This is helping to put pressure on the U.S. Dollar, making dollar-denominated gold a more desirable investment.

At 06:45 GMT, February Comex gold is trading $1477.40, down $5.70 or -0.38%.

Investors appear to be latching on to every headline regarding the U.S.-China trade deal. This week’s biggest rally took place on Tuesday after President Trump said he could wait until after the 2020 election to make a deal with China and after the Chinese said they wanted tariffs removed as part of a phase one trade deal.

Gold has been edging lower the past two sessions on renewed optimism over the trade deal. The Wall Street Journal reported Thursday that Washington and Beijing are still in disagreement over the size of China’s agriculture purchases.

Gold was also supported by weaker-than-expected U.S. economic data. On Tuesday, the ISM reported a drop in manufacturing PMI. On Wednesday, ADP reported private-sector employment slowed sharply in November.

Daily Forecast

Simply stated, positive news about a trade deal will be bearish for gold prices, and negative news will be supportive for higher prices. But ultimately, it comes down to the direction of Treasury yields and demand for risk. The best case scenario for gold bulls will be a plunge in yields and stocks. Soaring yields and stocks will weigh heavily on gold prices.

With the two sides remaining in close communications regarding trade, I don’t see a case where the market will take off in a big way in either direction unless there is blockbuster news like a deal announcement, or a breakdown in talks.

However, as we move closer to the December 15 deal deadline, and the imposition of fresh tariffs on China by the United States, I think gold will start to garner a little more support.

As far as today’s Non-Farm Payrolls report is concerned, the headline number will have to completely miss the estimate to shake up the gold trade. With the Fed not expected to make a move on rates until perhaps March 2020, the main focus for gold traders will be on the trade deal.

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