Price of Gold Fundamental Daily Forecast – Traders Showing Some Risk-Aversion Demand

Gold prices fell on Tuesday as the U.S. Dollar recovered from early losses and investors remained cautious ahead of Wednesday’s U.S. Federal Reserve interest rate decision and monetary policy statement.

Traders were also worried about President Trump’s announcement of the new Fed chair which he is expected to make on Thursday. Traders are also concerned about Friday’s U.S. Non-Farm Payrolls report.

Strong economic also data supported the Fed’s notion to raise interest rates in December, weighing on prices.

The Conference Board reported on Tuesday its consumer confidence index increased 5.3 points to 125.9 this month, the highest reading since December 2000. Another report showed sustained increases in house prices in August. The S&P/CS Composite-20 HPI came in at 5.9%, higher than the forecast and previous read of 5.8%.

A separate report from the Labor Department showed the Employment Cost Index, the broadest measure of labor costs, increased 0.7 percent in the third quarter after rising 0.5 percent in the second quarter. That lifted the year-on-year rate of increase to 2.5 percent, the largest gain since the first quarter of 2015.

The Chicago PMI rose 66.2 in October from 65.2 in September. This reading was the highest since March 2011. The consensus forecast had called for it to come in around 62.

Forecast

Gold prices are trading higher early Wednesday as traders reacted to the terrorist attack in New York City on Tuesday and ahead of the U.S. Federal Reserve’s monetary policy statement.

The terrorist attack, wherein a man driving a rented pickup truck mowed down pedestrians and cyclists killing eight people, prompted some risk-aversion demand.

The Fed is scheduled to release its statement following its meeting at 1800 GMT. A rate hike in December is largely priced into the markets. However, investors will be looking for hints on the Fed’s stance on monetary policy:  in particular, the inflation outlook and how the Federal Reserve wishes to respond.

Stated another way, investors want to know if the central bank is likely to adopt a “wait and see” mode or try to get ahead of the curve.

In other news, traders will get the opportunity to react to the latest ADP Non-Farm Employment Change report and ISM Manufacturing PMI.

Minor reports include Final Manufacturing PMI, Construction Spending, ISM Manufacturing Prices and Total Vehicle Sales.