Price of Gold Fundamental Daily Forecast – Short-Covering Rally Over, Headed into $1187.80 – $1182.90

Profit-taking and a strong U.S. Dollar are helping to drive gold prices lower early Thursday. Aggressive counter-trend buyers are booking profits after the four-session short-covering rally ran out of gas following a test of a major technical retracement zone at $1205.90 to $1215.10 the previous session.

At 0749 GMT, December Comex Gold futures are trading $1195.50, down $8.00 or -0.66%.

Gold is also being pressured by a stronger U.S. Dollar. The greenback is getting a boost from the announcement by China of fresh tariffs on U.S. goods. The move created safe-haven demand for the dollar.

The fear of rising interest rates is also pressuring gold. This is being driven by Wednesday’s Fed minutes which suggested the Federal Open Market Committee is on course to further raise interest rates in September and December, and probably in the first three quarters of 2019.

The break in gold following the news of fresh tariffs from China serves as further proof that gold is no-longer being considered a safe-haven asset during times of international turmoil. Investors prefer to use the dollar for protection.

Additionally, rising interest rates increase the opportunity cost of holding non-yielding, dollar-denominated gold, making the precious metal more expensive for foreign buyers.

Forecast

If the technical chart pattern stays true to form, December Comex Gold should break into at least $1187.80 to $1182.90.

The selling pressure is likely to continue to be driven by a stronger U.S. Dollar. The news from China seems to be wearing off quickly since it was largely expected. Therefore, most of the price action is likely being driven by expectations of further rate hikes by the Fed.

These expectations are being boosted by investors eagerly watching for the Fed’s economic symposium in Jackson Hole, Wyoming, which will begin on Friday. Investors are waiting to hear from Fed Chair Jerome Powell to see if he changes his tune about the economy or the direction of interest rates in light of President Trump’s criticism of monetary policy earlier this week.

Also today, investors will get the opportunity to react to a number of minor U.S. economic reports including Weekly Unemployment Claims, the Home Price Index, Flash Manufacturing PMI, Flash Services PMI and New Home Sales.