Price of Gold Fundamental Daily Forecast – Threat of Additional Tariffs Holding Traders Hostage

Gold futures are lower early Monday, continuing the move from Friday that was fueled by a stronger-than-expected U.S. Non-Farm Payrolls report and fears of an escalation of the trade dispute between the United States and China. Overall, it’s a firmer U.S. Dollar that is weighing on gold prices today. Expectations of higher interest rates is helping to make the U.S. Dollar a more attractive investment.

At 0945 GMT, December Comex Gold is trading $1199.50, down $0.90 or -0.07%.

Gold weakened on Friday as the dollar resumed its rally versus a basket of major currencies after stronger than expected payrolls data solidified expectations of a third interest rate increase in September this year.

According to the U.S. Labor Department, job growth steamed forward in August, with wages posting their largest annual increase in nine years, strengthening views the economy was so far weathering the escalating trade war with China.

The greenback was supported by safe-haven buying related to concerns over new tariffs against China that could be imposed at any time. However, gains were somewhat weakened as money also flowed into the safety of the lower risk Swiss Franc and Japanese Yen.

According to reports, now that the public consultation period for proposed U.S. tariffs on an additional $200 billion of Chinese imports ended at 0400 GMT on Friday, the Trump Administration could put new tariffs into place at any moment, though there is no clear timetable.

Gold is also being pressured by the threat of additional rate hikes by the Fed beyond the widely expected September increase. Treasury yields are moving higher with the yield on the benchmark two-year Treasury note jumping to its highest level in more than 10 years Friday.

In other news, investors increased their bearish stances in Comex Gold contracts to the biggest on record in the holiday-shortened week to September 4, data showed.

Forecast

Gold traders are going to remain focused on the U.S. Dollar. This is because it’s being influenced by the threat of additional tariffs and rising Treasury yields. The market is being held hostage by this latest round of tariff threats because they can be imposed at any time. This can cause a volatility spike because of the element of surprise.

As far as Treasury yields are concerned, they are expected to remain firm over the near-term because Friday’s payroll data likely cemented expectations that the U.S. Fed will raise interest rates in September, in what would be its third hike this year.

It’s a light day as far as economic data is concerned. FOMC Member Raphael Bostic is scheduled speak. In early August, he said he was in favor of only 1 more rate hike this year. However, last week, he turned hawkish when he said with the U.S. economy at full employment, inflation at the Federal Reserve’s 2-percent goal, and the economic risks balanced, the U.S. central bank needs to keep raising interest rates.