Price of Gold Fundamental Daily Forecast – Trader Demand for Risk Will Determine Next Major Move

Gold futures are edging lower shortly before the regular session opening on Thursday. Yesterday, the market hit a one-week high but there was no follow-through to the upside, which suggests a tentative trade.

At 0957 GMT, April Comex Gold futures are trading at $1323.50, down $2.10 or -0.16%.

At this time, investors have a lot on their table to consider. Technically, the trend is down on the daily chart, but there are signs that momentum may be getting ready to turn to the upside. It all depends on how the events currently being digested by traders on-fold.

These events include stock market volatility, the direction of interest rates, and political and geopolitical tensions.

Global equity markets have been under pressure this week while government bonds have been attracting safe-haven demand. Gold has also benefitted from safe-haven buying amid mounting investor concerns that growing trade tensions could hurt the global economy.

Forecast

This week’s sideways price action and today’s early subdued trade reflects a murky outlook. Traders are trying to determine which way they want to play gold in an environment that features rising interest rates, political uncertainty in the Trump administration and renewed worries about trade wars.

As far as interest rates are concerned, most investors expected the Fed to raise rates next week. Additionally, given this week’s weaker-than-expected inflation news and retail sales, the Fed is likely to raise rates only two more times later in the year.

Next week’s interest rate hike has been priced into gold. The outlook for only two more rate hikes later in the year is a little supportive for gold because in early February, investors were pricing in as many as three rate hikes.

I think the direction of the stock market and demand for higher-risk assets will determine the next major move in gold. If stocks continue to tumble due to the uncertainty surrounding the recent major changes in the White House and worries about protectionism and trade wars, then gold is likely to be underpinned over the near-term.

Gold could rally if investors can establish a support base at $1322.80. If they due then traders may make a run at $1334 then $1341.20 and $1342.00. The trigger point for a possible acceleration to the upside is $1342.00.

Look for gold to drift sideways to lower if $1322.80 then $1318.30 fail as support.