Price of Gold Fundamental Daily Forecast – Traders Betting on Bad News with $1750 on Radar

Gold futures are edging lower on Wednesday as traders await the release of the U.S. Retail Sales report at 12:30 GMT and the FOMC July meeting minutes at 18:00 GMT.

Ahead of the busy day, the probability of a 75 basis-point rate hike by the Federal Reserve in September sits at 54.5%. This is up from 34.5% early Monday. This number could move sharply higher if the retail sales report is bullish and the Fed minutes are hawkish. If this happens then gold futures could get crushed.

At 11:55 GMT, December Comex gold is at $1783.80, down $5.90 or -0.33%. On Tuesday, the SPDR Gold Shares ETF (GLD) settled at $165.45, down $0.26 or -0.16%.

Prices Retreating Despite Signs of Easing Inflation

It was only a week ago that gold prices surged to their highest level since July 5 after a U.S. Consumer Price Index (CPI) report inflation was unchanged for the month of July. That news triggered a short-covering rally in gold and perhaps drew in a few aggressive speculative buyers on the thought that the Fed would begin easing up on its aggressive tightening.

They weren’t alone though. Treasury yields dropped as well as the U.S. Dollar. The probability of a 75 basis point rate hike plunged and the chances of a 50 basis point rate hike rose.

However, gold prices topped the same day the CPI news came out as several Fed speakers came out to talk up the need for the central bank to keep raising rates until inflation reaches the mandated 2.0% level. Despite days of consolidation, prices broke through support as sellers re-established positions after U.S. economic data confirmed the economy was strong enough to take on more rate hikes.

Daily Forecast

We’re looking for a volatile session today because the U.S. retail sales report comes out at 12:30 GMT and the Fed minutes at 18:00 GMT.

The best scenario for gold bulls will be a weaker-than-expected retail sales report and dovish Fed minutes. However, we don’t expect to see that happen since the Fed members have already expressed their desire to see more rate hikes.

The worst scenario for gold bulls will be a strong or even neutral retail sales report and hawkish Fed minutes. This could crush gold prices and possibly drive them through the $1750.00 level.

With the odds of a 75 basis point rate hike creeping up, and gold prices falling ahead of the data, it looks as if traders have already started to price in bearish news for gold.