Price of Gold Fundamental Daily Forecast – Traders Eyeing U.S. PMI Data

Gold futures are edging higher on Wednesday shortly before the regular session opening. The market is also trading inside yesterday’s range, which suggests investor indecision and impending volatility. Traders are likely keeping their powder dry ahead of Thursday’s European Central Bank monetary policy decisions. The catalysts behind today’s early strength is likely lower U.S. Treasury yields and a weaker U.S. Dollar Index.

At 11:38 GMT, December Comex gold is trading $1439.60, up $5.40 or +0.30%.

In offsetting news, so-called “safe-haven” buying over tensions in the Middle East are said to be underpinning prices, while news that the U.S. and China have scheduled trade talks to begin next Monday, may be capping gains.

Daily Forecast

Barring any surprise news, the market is likely to remain in a range today ahead of the ECB decisions.

At 13:45 GMT, traders will get the opportunity to react to a few U.S. economic reports including Flash Manufacturing PMI, Flash Services PMI and New Home Sales.

Flash Manufacturing PMI is expected to come in at 50.9, up from the previously reported 50.6. Flash Services PMI is expected to show a slight improvement from 51.5 to 51.6. New Home Sales are expected to increase from 626K to 659K.

Stronger-than-expected reports could put pressure on gold prices because this would raise uncertainty about the need for a Fed rate cut next week. Gold prices could firm on weaker than expected data because it would solidify the chances of a 25-basis point rate cut and may increase chances of a 50-basis point rate cut, depending on the degree of the weakness.

On Thursday, the ECB could cut rates by 10-basis points, but at the very least, the central bank will signal fresh stimulus for September. A more dovish than expected announcement could drive the Euro lower and the U.S. Dollar higher. This would lead to lower foreign demand for dollar-denominated gold.