Price of Gold Fundamental Daily Forecast – Pressured by Vaccine Optimism, Stimulus Stalemate

Gold futures are trading lower on Wednesday after the short-covering rally ran out of gas following a test of a key short-term resistance zone at $1870.30 to $1894.60. The catalysts driving the market from a two-week peak are positive coronavirus vaccine developments, which are driving investors into higher-risk assets.

At 10:45 GMT, February Comex gold is trading $1862.70, down $12.20 or -0.65%.

Vaccine Developments

Global equity markets rose on Wednesday after Britain became the first Western country to begin a major vaccination campaign and Johnson & Johnson said it could obtain late-stage vaccine trial results earlier than expected.

Pfizer Inc cleared the next hurdle in the race for its emergency vaccine approval in the United States after a regulator released documents that raised no new issues about its safety or efficacy.

Another US Fiscal Stimulus Stalemate?

U.S. President Donald Trump’s administration proposed a $916 billion aid package, while Congressional lawmakers were still working on resolving differences on the inclusion of business liability protections and state and local government aid.

Gold investors are also looking forward to the U.S. Federal Reserve two-day policy meeting next week for clues on the direction of monetary policy.

Economic Reports

The key report from the U.S. on Wednesday is JOLTS Job Openings. It is expected to come in at 6.30 million, down from the previous reported 6.44 million.

A drop in the number will suggest the labor market recovery was slowing. Economists will blame the weak data on the surge in COVID-19 cases. This report is watched closely by Fed policymakers so a weak number will rev up the need for additional monetary and fiscal stimulus.

Daily Forecast

Today’s weakness is understandable given the optimism from the roll-out of the vaccine and the lack of progress toward a new stimulus package.

Moving forward, stimulus measures will be key as it will put pressure on the dollar and free up more liquidity for gold.

The price action suggests investors may not be willing to buy gold at current price levels. Additionally, the first leg up from the recent bottom was likely short-covering. This means we may need to have a pullback in order to attract new buyers. We think this target area is $1823.50 to $1810.20.

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