Price of Gold Fundamental Daily Forecast – Pressured as Emerging Market Turmoil Drives Demand for U.S. Dollar

Safe-haven demand for the U.S. Dollar amid fears of escalating global trade disputes and emerging market turmoil is helping to pressure gold prices on Tuesday. The financial market turmoil is sending investors into the safety of the U.S. Dollar, hurting foreign demand for dollar-denominated gold.

At 1200 GMT, December Comex Gold is trading $1199.70, down $7.00 or -0.58%.

As far as the escalating trade disputes are concerned, investors are nervous as we approach the end of the public comment period on a U.S. proposal for new tariffs on Chinese goods. After the public debate ends on Thursday, the Trump administration can follow through on plans to impose tariffs on $200 billion more of Chinese imports.

As an unexpected consequence of the U.S-China and U.S-European Union trade disputes, emerging market currencies like the Argentine Peso, Turkish Lira, South African Rand, Brazilian Real, Indonesian Rupiah and Indian Rupee plunged as investors fear these export-oriented economies will be caught in the escalating trade conflict.

Forecast

During times of economic stress, the dollar has become the go-to currency for safety. As long as this trend continues, any rallies in gold should be limited. On the downside, gold should remain stable as long as the Chinese Yuan is supported.

If the Yuan begins to fall quickly then gold prices could spike lower. According to the latest government data, hedge funds and money managers are still net short gold, although they did lighten up on their positions last week. However, it’s not going to take much for them to increase their net short positions once again if the dollar begins to surge once again on strong safe-haven buying.

Later today, investors will get the opportunity to react to economic data on U.S. ISM Manufacturing PMI. It is expected to fall to 57.6 from 58.1.

Other reports include:  Final Manufacturing PMI, Construction Spending, ISM Manufacturing Prices, IBD/TIPP Economic Optimism and Total Vehicle Sales.