Price of Gold Fundamental Daily Forecast – Powell’s Testimony Sets the Tone but Dollar Controls Price Action

Gold futures are edging lower Tuesday after giving back earlier gains. Aggressive, counter-trend traders tried to generate some buying interest earlier in the session after yesterday’s steep plunge, but there wasn’t enough interest to sustain the move. A weaker U.S. Dollar was the spark behind the rally, but a turnaround in the greenback helped squash those gains.

At 06:52 GMT, December Comex gold futures are trading $1908.40, down $2.20 or -0.12%.

Gold slumped over 3% on Monday, sliding to its lowest level in more than a month, as a broader market sell-off driven by uncertainty over more U.S. fiscal stimulus pressured the precious metal along with a stronger U.S. Dollar.

Let’s face it, we’re seeing a repeat performance from March/April when stock market weakness led investors to sell gold to cover losses and meet margin calls. We’re also seeing investors favor the Japanese Yen, U.S. Dollar and Treasurys for protection, destroying those investors that still think gold is a safe-haven asset. We all know it’s not, it’s a store of value to be used to provide funds when riskier assets fail to do so.

Timely Fiscal Stimulus Not Likel

Ginsburg’s death could lead to a tie vote when the Supreme Court hears a challenge to the constitutionality of ACA in November.

Congress has for weeks remained deadlocked over the size and shape of another coronavirus-response bill, on top of the roughly $3 trillion already enacted into law.

Daily Forecast

Most of the focus for gold traders will remain on the direction of the U.S. Dollar and appetite for risk. There are economic reports, but the catalyst behind the movement in the greenback and stock market is most likely going to be Fed Chair Jerome Powell’s testimony before Congress.

The Federal Reserve remains committed to using all the tools at its disposal to help the U.S. economy recovery from the blow delivered by the coronavirus pandemic, Chair Jerome Powell said on Monday.

“We remain committed to using our tools to do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy.”

Powell said in remarks released ahead of Tuesday’s appearance before the House of Representatives Financial Services Committee, the first of three days of testimony to Congress this week.

If that’s all Powell is going to say then there is risk to the downside for gold because that’s what he said last week when the dollar rose and gold collapsed.

For a look at all of today’s economic events, check out our economic calendar.