Price of Gold Fundamental Daily Forecast – Supported by U.S.- China Trade Concerns

Gold futures were pressured on Wednesday by the stronger U.S. Dollar and the tone in the Fed’s monetary policy statement. However, the market remained inside the previous day’s range, suggesting consolidation may be taking place. The price action may be the result of oversold technical conditions, or the Fed giving traders what they expected.

On Wednesday, June Comex Gold finished at $1305.60, down $1.20 or -0.09%.

Technically, the trend may be down, but the market is finding support inside a major 50% to 61.8% retracement zone at $1311.40 to $1296.20.

The U.S. Federal Reserve left its benchmark overnight lending rate in a target range of between 1.50 percent and 1.75 percent.

The Federal Open Market Committee said inflation had “moved close” to its target and downplayed a recent slowdown in economic and job growth, saying activity had been expanding at a moderate rate and job gains, on average, had been strong in recent months.

Essentially, its monetary policy statement suggested the Fed is confident that inflation remains on track to meet its target.

In other news that could influence how investors prepare for Friday’s U.S. Non-Farm Payrolls report, ADP, the large payroll processor, said on Wednesday that businesses added 204,000 jobs last month, possibly signaling the headline number in the government’s non-farm payrolls report on Friday will reveal a rebound in hiring after a weak showing the prior month.

According to estimates, economists expected the ADP report to show the private sector of the economy added 198,000 jobs. Friday’s U.S. Non-Farm Payrolls report is expected to show that 195,000 jobs were added in the public and private sectors.

“Despite rising trade tensions, more volatile financial markets and poor weather, businesses are adding a robust more than 200,000 jobs per month,” said Mark Zandi, chief economist of Moody’s Analytics, which helps ADP compile the report.

Forecast

Gold prices are trading higher early Thursday ahead of the highly anticipated U.S-China trade talks. Traders are not expecting any major breakthrough deals at this meeting which is creating some uncertainty in the market, fueling today’s short-covering rally.

At 0814 GMT, June Comex Gold is trading $1309.40, up $3.80 or +0.30%.

Gold is trading at its lowest level of the year at a time when traders will get a chance to react to a geopolitical event for the first time in a little more than three weeks.

The outcome of the meeting between the U.S. and China is making traders nervous enough to take profits and square positions after prices declined nearly $70 since April 11. Gold is also trading inside a major retracement zone at $1311.40 to $1296.20 which seems to be attractive to aggressive counter-trend buyers.

Gold could pop to the upside if buyers can take out $1311.40 and sustain the rally. Gains could be limited, however, if the U.S. Dollar continues to strengthen.

Gold could rally as high as $1335.90 over the near-term if the dollar weakens and trade issues between the U.S. and China begin to simmer once again.

If the trade talks between U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He are deemed successful and meaningful deals are struck then look for gold to extend its recent losses.