Price of Gold Fundamental Daily Forecast – Traders Eyeing Dollar, Powell’s Speech for Direction

Gold prices are trading relatively flat shortly before the regular session opening on Wednesday. The price action may be related to position-squaring following yesterday’s steep decline. Traders continue to monitor the price action in the U.S. Dollar, equities and Treasurys for direction. Yesterday’s sell-off was in reaction to comments from Federal Reserve Vice Chairman Richard Clarida. Today’s price action will likely be determined by today’s Preliminary GDP report and a speech by Fed Chair Jerome Powell.

At 1201 GMT, February Comex Gold is trading $1220.90, up $1.10 or +0.10%.

Yesterday’s selling pressure was fueled by a surge in the U.S. Dollar. The dollar gained momentum after Clarida said on Tuesday that he backed further interest rate hikes. He also suggested the Fed is moving toward neutrality, but couldn’t say when it would get there.

Forecast

On Wednesday, the main focus for gold traders will be a speech by the Fed Chair Powell. He will deliver his speech at the Economic Club of New York. During the event, he is slated to talk about the Fed’s framework for monitoring financial stability.

Yesterday, President Trump told the Washington Post that he wasn’t “even a little bit happy” with his appointment of Powell as the Fed’s Chair, adding that he thought the central bank’s recent actions were “way-off base”.

In economic news, investors will get the opportunity to react to the latest Gross Domestic Product (GDP) figures due out at 1330 GMT. GDP is expected to rise slightly to 3.6% from 3.5%. The Goods Trade Balance is expected to increase slightly to -76.7 billion. Preliminary Wholesale Inventories are expected to have risen 0.5%.

New Home Sales and the Richmond Manufacturing Index are due out at 1500 GMT. New Home Sales are expected to come in at 583K units, up from 553K. The Richmond Fed’s manufacturing data is expected to come in at 16, up one notch.

Powell’s speech will take place at 1700 GMT. Traders are hoping he clarifies the Fed’s stance on future rate hikes, given the recent weak economic data and volatility stock market. He is likely to reiterate previous speeches, saying the Fed will continue to raise rates gradually and that the central bank’s decision will continue to be “data dependent”.