Price of Gold Fundamental Daily Forecast – Strengthening Due to Geopolitical Concerns Ahead of GDP Report

Gold futures are trading higher on Thursday, helped by a number of factors including a drop in Treasury yields, a weaker U.S. Dollar and lower demand for risky assets. One of the catalysts behind the strength in gold prices is the news that the nuclear summit between U.S. President Donald Trump and North Korean leader Kim Jong Un was cut short and no agreement was reached.

Another concern is U.S.-China trade relations, which appear to have hit a snag. Weakening factory output in China and Japan also contributed to worries over the weakening global economy. Finally, we could also be looking at traders positioning themselves ahead of the U.S. Advance GDP report at 13:30 GMT.

At 11:33 GMT, April Comex gold futures are trading $1328.10, up $6.90 or +0.52%.

Early Thursday, the talks between the United States and North Korea were cut short because the two sides could not agree on sanctions. “It wasn’t a good thing to be signing anything,” President Trump said during a post-summit news conference. “We had some options, and at this time we decided not to do any of the options, and we’ll see where that goes.”

“Sometimes you have to walk, and this was one of those times,” he added.

Investors remained cautious amid uncertainty over the progress in U.S.-China trade talks after U.S. Trade Representative Robert Lighthizer told a Congressional hearing it was too early to predict an outcome in U.S.-China trade negotiations.

Demand concerns were raised earlier in the session after a report showed factory activity in China contracted to a three-year low in February as export orders fell at the fastest pace since the global financial crisis. The official Purchasing Managers’ Index (PMI) fell for the third straight month, dropping to 49.2 in February from 49.5 in January, according to data released by the National Bureau of Statistics (NBS).

Similar concerns were raised following the release of a report that showed Japan’s industrial output fell 3.7 percent in January from December. This was the third straight monthly decline and came amid sluggish export demand. Following the news, the Ministry of Economy, Trade and Industry downgraded its basic assessment, saying production is “pausing,” compared with the previous month’s view that industrial output was “picking up slowly.”

Daily Forecast

Gold may be trading higher on Thursday, but the inside move suggests investor indecision and impending volatility. This cautious approach comes before the release of the U.S. Advance GDP report at 13:30 GMT.

After a month-long delay due to the federal government shutdown, data out Thursday is expected to show just how much the U.S. economy slowed in the fourth quarter, and what it could mean for 2019 economic growth.

The report is expected to show gross domestic product expanded at a 2.3 percent annualized pace in the fourth quarter following the best back-to-back gains since 2014, according to the median estimate of economists surveyed by Bloomberg ahead of the Commerce Department report.

Gold could rise if the GDP comes in lower-than-expected because this would put pressure on the U.S. Federal Reserve to keep a lid on interest rates. However, gains could be limited in gold if investors decide to move money into the safe-haven U.S. Dollar.