Price of Gold Fundamental Daily Forecast – Traders Looking for Clarity Over US Fiscal Stimulus

Gold futures are trading lower shortly after the opening on Wednesday, but attempting to claw back its earlier losses after President Trump clarified his position on fiscal stimulus late Tuesday night. Traders are responding to a similar move in the U.S. Dollar. Essentially, the price action is being controlled by risk appetite.

At 12:08 GMT, December Comex gold is trading $1892.50, down $16.30 or -0.85%.

Trump’s Decision to End Stimulus Negotiations Sets Off Chain of Events

Late Tuesday afternoon, Trump triggered a steep break in U.S. equity markets and drove investors into the U.S. Dollar and out of long gold positions after he cancelled stimulus talks with Democrat lawmakers. Trump’s surprise decision to call off stimulus talks until after the November 3 presidential election initiated a selling spree on Wall Street with investors bracing for fresh downside risks for an already shaky U.S. economy. This made the U.S. Dollar a more attractive asset while dampening the appeal of dollar-denominated gold.

The selling in gold stopped and sentiment improved late Tuesday/early Wednesday when Trump made a few concessions that renewed calls for stimulus. Trump said he’s willing to pass several independent coronavirus relief measures – including a new round of stimulus checks.

“If I am sent a Stand Alone Bill for Stimulus Checks ($1,200), they will go out to our great people IMMEDIATELY. I am ready to sign right now. Are you listening Nancy?” Trump tweeted.

“The House & Senate should IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support, & 135 Billion Dollars for Paycheck Protection Program for Small Business. Both of these will be fully paid for with used funds from the Cares Act. Have this money I will sign now!” the president wrote in another tweet.

Trump’s show of support for the individual coronavirus relief comes after he rejected a proposal from House Democrats earlier Tuesday and called on congressional Republicans to hit the brakes on the negotiations until after the election.

Fed Minutes on Tap

Minutes of the Fed’s September meeting to be published Wednesday at 18:00 GMT should provide a window into the Fed’s internal debate on those issues and, perhaps, some new answers on what it will mean in practice.

The U.S. Federal Reserve last month signaled that interest rates are likely to stay at zero through 2023, vowing to wait on rate hikes until inflation reaches 2% and is set to rise moderately above that level for a time.

Fed Chair Jerome Powell warned Tuesday that the outlook for the U.S. economy is “highly uncertain,” and that too little policy support could lead to more household and business insolvencies and “recessionary dynamics” where a weak recovery feeds on itself.

The Fed minutes may show how widely shared that concern is.