Price of Gold Fundamental Daily Forecast – Rangebound Ahead of Fed Interest Rate Decision

Gold futures are trading slightly better shortly before the regular session opening after recovering from early session weakness. Gold traded lower earlier in the session as the U.S. Dollar firmed on news that China had cancelled trade talks with the United States. The move by the world’s second-largest economy raised concerns about an escalation of the trade dispute.

At 1131 GMT, December Comex Gold futures are trading $1204.30, up $3.00 or +0.25%.

Traders are also positioning themselves ahead of Wednesday’s widely expected interest rate hike by the U.S. Federal Reserve. Some traders aren’t reading much into the price action because of low liquidity due to a holiday in Japan and China.

Last Monday, the U.S. imposed an additional 10 percent tariff on $200 billion of Chinese goods. China retaliated on $60 billion of U.S. products to its import tariff list. However, gold strengthened as investors lifted long U.S. Dollar hedges after concerns eased over an escalation of the trade dispute.

Traders are going to continue to focus on U.S.-China trade relations although there are not likely to be any mid-level trade talks until after the U.S. mid-term November elections.

As far as the Fed is concerned, the rate hike has been priced into gold. Investors are no waiting for the monetary policy statement since this could shed light on the path for future rate hikes.

In other news, speculators increased their net short positions in COMEX gold contracts in the week to September 18, government data showed on Friday.

Forecast

The daily chart shows that December Comex Gold has been trapped inside a range bounded by $1167.10 and $1220.70 since mid-August. The middle of this range is $1193.90. This level has become support.

Gold isn’t going to go anywhere until it breaks out of the trading range. Furthermore, it is probably going to take a significant move in the U.S. Dollar to drive it out of its trading range. Government data also shows that gold short-sellers are still in control. Therefore, gains are likely to be limited today.

There are no major economic reports today, China and Japan are on holiday and the Fed starts its two-day meeting on Tuesday. Look for a low volume, low volatility trading session.