Price of Gold Fundamental Daily Forecast – Stock Market Weakness Key to Further Upside Action

Gold prices rose on Thursday, supported by the weaker U.S. Dollar and increased demand for safe-haven assets. The political uncertainty in the United States and the possible terrorist attack in Barcelona also drove investors out of risky assets and into lower-yielding assets like gold.

December Comex Gold settled the session at $1292.40, up $9.50 or +0.74%.

The U.S. Dollar was a major influence on gold yesterday. Dollar and gold traders continued to react to Wednesday’s dovish Fed minutes as well as concerns over the Trump administration’s ability to push forward its economic agenda. Geopolitical concerns also influenced trader decisions. The market were rattled by an attack in Barcelona and rumors of the possible departure of a key Trump administration official.

The dollar posted a volatile two-sided move during the session, first driven lower by the Fed news from the previous session then driven higher by a sell-off in the Euro because of the dovish tone of its monetary policy meeting minutes.

Prices continued to gyrate in both directions throughout the session as investors continually switched from “risk off” to “risk on” scenarios. The index took out the previous day’s low, but buy the end of the session, it still managed to eke out a small gain.

A drop in demand for higher risk assets also encouraged investors to buy gold against a further drop in U.S. equity prices.

The major U.S. stock indexes fell sharply on Thursday on concerns about President Trump’s ability to run a government and to push through key business-friendly legislation. The selling started early in the session on rumors that Gary Cohn, a business advisor to the president, could resign his role as director of the National Economic Council. This helped create fears that Trump would not be able to pass tax reform, or move forward with his plans to rebuild the country’s infrastructure.

Forecast

Today is a light day as far as U.S. economic data is concerned. Traders will get a chance to react to the latest data on Preliminary University of Michigan Consumer Sentiment and Preliminary University of Michigan Inflation Expectations. FOMC Member Robert Kaplan is also scheduled to speak.

Gold traders are going to continue to react to the same factors that have been driving prices higher since Wednesday. They are the direction of U.S. interest rates, political uncertainty and geopolitical risks.

Technical traders are eyeing the main top at $1298.10. If the buying is strong enough to take out this top then look for the rally to extend into at least $1305.50 to $1307.00. The sky’s the limit over $1307.00, in my opinion. This price is likely to be taken out with conviction if it gets help from a steep drop in the stock market.