Price of Gold Fundamental Daily Forecast – Tensions Between U.S., North Korea Are Simmering

Gold prices are getting a bump early Thursday as investors continue to digest the Fed minutes. Gold could be underpinned throughout the session today if the dollar continues to extend its losses in reaction to the latest Fed minutes that hinted at a dovish approach to interest rate hikes in the United States.

At 0830 GMT, June Comex Gold is trading at $1296.30, up $6.70 or +0.52%.

Gold is also being underpinned by renewed geopolitical concerns over U.S-China trade relations and a possible cancellation of the U.S.-North Korean summit.

The Fed minutes showed most policymakers thought it likely another interest rate increase would be warranted. This was no surprise, investors have already priced in a 95% chance of a quarter-point rate hike in June.

Central bank policymakers also revealed they would tolerate inflation rising above its 2 percent mandate for a time.

In other news, U.S. Flash Manufacturing PMI came in as expected at 56.6. Flash Services PMI was better-than-expected at 55.7 versus a 54.9 estimate. New Home Sales were a disappointing 662K. Traders were looking for 680K. The previous month’s report was revised lower to 672K.

Forecast

Gold should be supported on Thursday if Treasury yields continue to retreat and drag down the U.S. Dollar. On Wednesday, yields fell after the release of the Fed minutes. Gold will get an additional boost if geopolitical concerns continue to escalate especially over North Korea.

Earlier in the week, speaking in an interview on Fox News, Vice President Mike Pence said the reclusive regime could end up like Libya “if Kim Jong Un doesn’t make a deal.” He also warned Kim that it would be a “great mistake” to play Washington ahead of an anticipated meeting with President Donald Trump on June 12.

In response, North Korean Vice Minister of Foreign Affairs Choe Son Hui said in a Thursday statement carried by state-run news agency KCNA that “as a person involved in the U.S. affairs, I cannot suppress my surprise at such ignorant and stupid remarks gushing out from the mouth of the U.S. vice-president.”

A couple of Fed members will be in focus today as well as a few economic reports. However, investors are likely to respond more to the movement in U.S. Treasury markets and their continued response to the Fed minutes.

FOMC Member William Dudley is expected to speak early Thursday at 0815 GMT and FOMC Member Raphael Bostic is scheduled to speak at 1435 GMT.

Weekly Unemployment Claims are expected to come in at 220K, down slightly from 222K. The Home Price Index (HPI) is forecast at 0.5%, down slightly from the previously reported 0.6%. Existing Home Sales are expected to come in at 5.56M, down slightly from 5.60M.