Price of Gold Fundamental Daily Forecast – No Evidence that Liquidation Break is Over

Gold prices held firm early in the session on reports of an explosion in New York City and in reaction to technically oversold markets, however, sellers eventually retook control, driving prices to their lowest level since July 15.

Buyers were also scarce because of expectations of another Fed rate hike on Wednesday. Rising interest rates tend to underpin the U.S. Dollar, making it a more desirable asset. This leads to a drop in demand from foreign investors for the dollar-denominated asset.

On Monday, February Comex gold futures settled at $1246.90, down $1.50 or -0.12%.

In other news, the Bureau of Labor Statistics announced that the number of job openings was stagnant in the month of October. The results of the October Job Openings and Labor Turnover Survey (JOLTS) showed the number of job openings was “little changed” at 6 million on the last business day of October, while hires increased to 5.6 million, according to the Labor Department.

In auction news, the Treasury Department auctioned $24 billion in 3-year notes at a high yield of 1.932 percent. The bid-to-cover ratio, an indicator of demand, was 3.15, Indirect bidders, which include major central banks, were awarded 59 percent. Direct bidders, which includes domestic money managers, bought 7.4 percent.

The Treasury Department also auctioned $20 billion in 10-year notes at a high yield of 2.384 percent. The bid-to-cover ratio, an indicator of demand, was 2.37. Indirect bidders, which include major central banks, were awarded 57.2 percent. Direct bidders, which includes domestic money managers, bought 8.4 percent.

Forecast

Gold futures are trading a little firm Tuesday, but this is not real buying. Position-squaring and profit-taking is probably driving the price action.

We’re going to be looking for the final liquidation before considering the long, we may have even seen it last week. In this case, we’ll watch for a support base to be formed. Data released last Friday by the U.S. Commodity Futures Trading Commission showed speculators sharply cut their net long positions in gold to the lowest since early August due to recent price weakness.

The recent selling and liquidation can be attributed to expectations of rising interest rates, increased demand for higher risk, and rising demand for bitcoin.

I’m not expecting too much movement today given the current fundamentals. We could see a short-covering rally, but gains will be limited, or we could see more liquidation. Volatility could be high in either direction because volume is expected to come in well-below average.