Price of Gold Fundamental Daily Forecast – Traders Positioning Ahead of Wednesday’s Fed Decisions

Gold futures are trading flat-to-lower early Tuesday in reaction to a firmer U.S. Dollar. Volume and liquidity are a little higher today after yesterday’s bank holidays in Japan and China. However, it’s still below average ahead of the start of the two-day U.S. Federal Reserve meeting beginning later in the day. At the same time, worries over U.S.-China trade tensions are making investors nervous about risks to global growth.

At 0610 GMT, December Comex Gold is trading $1203.30, down $1.00 or -0.08%.

Forecast

Gold has been rangebound since mid-August and is likely to remain in this state of flux as long as the Fed doesn’t do something widely unexpected on Wednesday.

The U.S. Federal Reserve is widely expected to raise its benchmark interest rate 25 basis points on Wednesday. This event has already been priced into the market. Gold is not likely to move on this news, but traders could react to any news on the path of future rate hikes.

For example, a dovish Fed monetary policy statement could put upside pressure on gold, while threatening to trigger a breakout above the key resistance level at $1220.70. The Fed cutting back on the number of rate hikes in 2019 or removing the word “accommodating” from its policy statement would be supportive.

Gold could break further if the Fed continues to press for more rate hikes in 2019 in order to gain control of rising inflation, or if it leaves the word “accommodating” in its monetary policy statement.

Additionally, gold could fall further if escalating trade tensions between the United States and China drives investors into the safe-haven U.S. Dollar.

Traders will get the opportunity to react to several U.S. economic reports today, but the primary focus will be on the start of the Fed’s two-day meeting and interest rate decision on Wednesday.

Today’s Home Price Index (HPI) is expected to show an increase of 0.2%. The S&P/CS Composite-20 HPI is expected to come in at 6.2%.

The Conference Board’s Consumer Confidence report is expected to come in at 132.2, slightly below the previously reported 133.4. The Richmond Manufacturing Index is forecast at 22, down from 24.