Price of Gold Fundamental Daily Forecast – No Catalyst to Sustain a Strong Rally

Gold prices retreated on Monday, nearing a four-week low reached last week, in reaction to the stronger U.S. Dollar. The catalysts behind the weakness were the approval of the tax overhaul plan and expectations of a Fed rate hike later this month. The return of volatility to the U.S. equity markets helped limit losses.

At 1252 GMT, February Comex Gold futures are trading $1276.70, down $1.00 or -0.08%.

There isn’t a lot of news out there to generate enough interest in gold to sustain a meaningful rally at this time. There may be some speculative buying coming in due to concerns over North Korea and a possible meltdown in the stock market, but this does not represent quality investment demand.

Overall physical demand is down also with very little buying from China and India. I suspect that Bitcoin investing may be influencing buyers from these two countries, taking money away from gold.

Without a demand spark, gold is likely to be driven by the price action in the U.S. Dollar. The dollar is going to be supported by rising U.S. Treasury yields and increased demand for higher risk assets.

On Tuesday, investors will get the opportunity to react to U.S. Trade Balance and ISM Non-Manufacturing PMI. However, the focus this week will remain on U.S. tax reform and the Non-Farm Payrolls report on Friday.