Price of Gold Fundamental Daily Forecast – Traders Looking for New Catalysts

Gold prices rose on Wednesday, supported by lower U.S. Treasury yields and a weaker U.S. Dollar. The catalysts behind the buying were Trump’s comments after shutting down the government and ending NAFTA, and the disappointing Flash Manufacturing PMI and New Home Sales reports.

The market was also underpinned by weakness in the stock market which drove up demand for safe haven gold.

December Comex Gold futures settled at $1294.70, up $3.70 or +0.29%.

U.S. Treasury yields fell and the U.S. dollar weakened on Wednesday as investors reduced exposure in higher-yielding assets after U.S. President Trump’s threat of a government shutdown and comments about the possible termination of a North American trade agreement.

In a speech In Phoenix, Arizona, late Tuesday, Trump warned he might terminate the NAFTA trade treaty with Mexico and Canada after a three-day conference failed to settle deep differences. He also stated that he may shut down the government if he does not get funding for a wall on the U.S. –Mexico border.

Trading conditions were thin as investors awaited speeches from Fed Chair Janet Yellen and European Central Bank President Mario Draghi on Friday in Jackson Hole, Wyoming. Therefore, the market may have over-reacted to Trump’s comments. No one can be certain whether Trump was trying to publicly negotiate changes to the current treaty, or if he was actually serious about ending NAFTA completely.

Forecast

Early Thursday, gold remains in a tight trading range. The chart pattern suggests an upside bias, but gains are being limited by investor indecision. However, this type of chart pattern is also followed by volatility.

Gold traders may be waiting to hear from European Central Bank President Mario Draghi and Fed Chair Janet Yellen on Friday at Jackson Hole, Wyoming, before making their next move.

Draghi is expected to give a toned-down speech on the global economy. He is not expected to talk about ECB policy because he fears setting off a rally by the EUR/USD. If he does talk monetary policy, he will probably try to talk down the single currency.

Yellen is also not expected to talk about the direction of interest rates. This is probably because everything the Fed has to say about the next rate hike was revealed in the Fed minutes and in subsequent FOMC member speeches. Yellen may talk about the Fed’s plan to begin trimming its massive balance sheet.

In the U.S. on Thursday, investors will get the opportunity to react to the latest data on Weekly Unemployment Claims, Existing Home Sales and Mortgage Delinquencies.