Price of Gold Fundamental Daily Forecast – Tariff Announcement Could Spike Prices Lower

Gold prices will continue to be influenced by the direction of the U.S. Dollar on Tuesday. The announcement of additional tariffs on China could trigger a spike to the downside in gold.
James Hyerczyk
Comex Gold
Comex Gold

Gold futures are trading lower and in a tight range for a second day on Tuesday amid concerns over rising interest rates and an escalation of the trade war between the United States and China. Both factors are supporting the U.S. Dollar, which is putting pressure on demand for dollar-denominated gold.

At 0921 GMT, December Comex Gold is trading $1199.20, down $0.60 or -0.05%.

August’s strong U.S. payrolls data released on Friday solidified expectations that the U.S. Federal Reserve will hike interest rates in September. It also helped boost the chances of another rate hike in December.

The U.S. Dollar was also boosted by safe-haven demand after President Trump last week said he was ready to impose tariffs on virtually all Chinese imports to the United States. Traders also bought the dollar on this news in the belief that the U.S. has less to lose from a trade war.

There were no major reports on Monday, but Boston Fed President Eric Rosengren said that the gradual pace of rate increases would limit the danger of over tightening monetary policy.

Atlanta Fed President Raphael Bostic said the Fed should pause its hiking cycle when it reaches the neutral rate, the theoretical level of interest rates where monetary policy is neither stimulative nor retarding.

Forecast

Gold prices will continue to be influenced by the direction of the U.S. Dollar on Tuesday. The announcement of additional tariffs on China could trigger a spike to the downside in gold.

U.S. reports are on the light side. The NFIB Small Business Index is forecast at 108.1, up from 107.9. Final Wholesale Inventories are expected to come in at 0.7%, unchanged. The JOLTS Job Openings report is expected to be unchanged at 6.68 million.

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