Price of Gold Fundamental Daily Forecast – Trader Appetite for Risk Will Set the Tone

Gold prices retreated from a one-week high on Wednesday as the dollar recovered and stocks rebounded from a steep sell-off in the pre-market session. Gold was supported earlier in the session after U.S. President Donald Trump said he would push ahead with punitive tariffs on imports, rekindling fears of a potential trade war.

April Comex Gold futures settled at $1327.60, down $7.60 or -0.57%.

Gold traders began to take profits, triggering the start of an intraday sell-off in response to positive labor market data from ADP and positive comments from the White House saying the administration may be open to exempting Canada and Mexico, and possibly other countries to the planned U.S. import tariffs on steel and aluminum.

In the U.S., the ADP Non-Farm Employment Change report came in at 235K, beating the 199K forecast. Last month’s number was revised higher to 244K.

Revised Non-Farm Productivity was 0.0%. Revised Unit Labor Costs were up 2.5%. The U.S. Trade Balance was -$56.6 Billion, higher than the $55.1 Billion forecast. The previous number was revised lower to -$53.9 Billion.

In Fed news, Federal Reserve Bank of Atlanta President Raphael Bostic said a potential trade war is casting doubt over how many times the U.S. central bank will need to raise interest rates this year. He also said it might offset momentum from fiscal stimulus.

Bostic, a leading dove, also said 2 to 4 rate hikes are possible this year and the stock market could be hit by concerns about trade.

Finally, the Federal Reserve Beige Book showed businesses reported persistent labor market tightness across the United States, with accelerating wage gains in many regions. This news supported the case for interest rate increases.

Forecast

Gold prices are firming early Thursday, following yesterday’s potentially bearish closing price reversal top. Position-squaring ahead of the outcome of the European Central Bank’s policy meeting and the lack of clarity over President Trump’s trade policy are helping to underpin prices.

At 0712 GMT, April Comex Gold futures are trading $1329.20, up $1.60 or +0.12%.

Gold is likely to strengthen today if fears about a global trade war continue to grow. Trump is expected to sign a presidential proclamation establishing the tariffs during a ceremony scheduled for 2030 GMT on Thursday.

Prices could retreat if the President gives in to pressure from Republicans to rescind the tariff order, or if Trump decides to exempt Canada, Mexico and possibly other countries from the tariffs.

The direction of the market today is likely to be determined by trader appetite for risk. If it’s a risk on day then look for weakness. If risk is off then gold could strengthen as investors seek protection in the safe haven market.