Price of Gold Fundamental Daily Forecast – Possible US-China Trade Deal Pressuring Dollar, Supporting Gold

A weaker U.S. Dollar is helping to support dollar-denominated gold early Friday. The dollar is being crushed by renewed demand for emerging market currencies on reports that the United States and China may be close to striking a new trade deal.

Gold surged on Thursday following a plunge in the dollar after President Trump said he has spoken to Chinese President Xi Jinping. The dollar is being further pressured on Friday on a report that Trump has asked officials in his administration to start drafting the terms of a possible trade deal with China, Bloomberg reported.

At 0826 GMT, December Comex Gold is trading $1237.30, down $1.50 or -0.11%.

Later today, investors will get the opportunity to react to the latest U.S. Non-Farm Payrolls report. According to surveys, non-farm payrolls are expected to show the economy added 194,000 jobs in October. The unemployment rate is expected to come in at 3.7%, unchanged from September. Average Hourly Earnings are expected to rise 0.2%.

Forecast

Gold traders have a lot of factors to consider at this time. Gold could rally further if the dollar continues to fall on optimism that a deal between the U.S. and China could be reached shortly. However, gains could be limited if a stronger-than-expected jobs report points towards higher interest rates by the Fed.

Furthermore, increased demand for higher risk assets could also limit gains in gold.

Our money is on the dollar exerting the biggest influence of gold prices. This is because investors have been steadily buying the dollar as the trade dispute between the US and China escalated. Tensions between the two countries should dampen if a new trade deal is reached. This should drive the dollar sharply lower, and gold possibly sharply higher.