Price of Gold Fundamental Daily Forecast – Supported by Demand for Safe Haven Assets

Gold prices were supported on Tuesday by continued concerns over North Korea’s nuclear posturing and the weaker U.S. Dollar. Much of gold’s rally can be attributed to the flight into so-called “safe-haven” assets due to the geopolitical uncertainty that has been stoked up by the events in the Korean peninsula.

December Comex Gold futures settled at $1344.50, up $5.10 or +-.38%.

Traders reacted on Tuesday to reports that North Korea had been observed moving what appeared to be an intercontinental ballistic missile (ICBM) towards its west coast, South Korea’s Asia Business Daily reported on Tuesday.

Forecast

Besides the growing tension over North Korea, gold traders are also reacting to the possibility that the Fed will keep interest rates at current levels until at least mid-2018. Based on Fed member comments on Tuesday, the central bank is not likely to raise rates this year which should continue to make the U.S. Dollar a less-desirable investment.

The dollar was further pressured and gold supported on Tuesday after Fed Governor Lael Brainard said the U.S. central bank should go so far as to make it clear it is comfortable pushing prices modestly above the Fed’s 2-percent target.

“We should be cautious about tightening policy further until we are confident inflation is on track to achieve our target,” Brainard, a permanent voter on monetary policy, said in a speech in New York.

Later on Tuesday, Minneapolis Fed President Neel Kashkari said that the Fed rate hikes may be slowing inflation, wage growth, and job growth.

“There may be a lot more slack in the labor market than we appreciate,” Kashkari said. “The Fed may have allowed inflation expectations to drift lower.”

The December Comex Gold contract is in an uptrend with its November 9, 2016 top at $1353.00 its next likely target. This top occurred the night of the Presidential election. Overcoming this level could set prices soaring to $1400.00.

I don’t think the market is overbought like some analysts have said. There have been enough short-term corrections over the near-term to alleviate this condition. Any correction is going to occur because of a strengthening dollar and not the price action. The market will move wherever momentum takes it.