Price of Gold Fundamental Daily Forecast – Traders Unfazed by Surge in Treasury Yields, Tapering Expectations

Gold futures are inching higher early Tuesday as stubborn bulls refuse to acknowledge the sharp rise in U.S. Treasury yields, instead choosing to bet on inflation to continue for longer than previously anticipated.

The market is expected to continue its rangebound ways into at least Wednesday when the U.S. government releases its latest consumer inflation figures and the Federal Reserve issues its latest FOMC Meeting Minutes.

In the meantime, the market is expected to remain supported by simmering concerns over inflation, while being capped by a firm U.S. Dollar and expectations that the U.S. Federal Reserve will announce a tapering of its bond purchases next month.

At 05:24 GMT, December Comex gold futures are trading $1760.50, up $4.80 or +0.27%.

10-Year Treasury Yields Reserve to Downside after U.S. Bank Holiday

10-year U.S. Treasury yields are trading lower early Tuesday after the futures market pointed toward higher rates following Monday’s U.S. bank holiday. The two-sided price action suggests investor indecision over whether the Federal Reserve will soon look to taper its massive asset purchases.

Traders are still taking their guidance from September’s jobs report, released Friday, which showed that non-farm payrolls rose by 194,000 last week. That was well below a forecast of 500,000 new payrolls in September.

The weaker jobs report, however, did little to assuage investor concerns that the Fed will soon look to pull back its bond buying program. Employment data is one indicator being used by the central bank to guide its timeline on tightening monetary policy.

In fact, the 10-year yield rose above the 1.6% following the release of the report, hitting its highest level since June 4.

Daily Forecast

There were no major economic data releases on Monday, but on Tuesday, investor attention will shift to August’s Job Openings and Labor Turnover Survey (JOLTS).

Last month, gold prices rose for about four days following the release of the JOLTS report that showed the number of job openings increased to a series high of 10.93 million in July, according to the Bureau of Labor Statistics.

Tuesday’s report is forecast to show a slight rise to 10.95 million. This report will be watched for confirmation that U.S. labor problems reflect a lack of supply rather than of demand.

FOMC Members Clarida and Bostic are also scheduled to speak. Gold could feel pressure if both Fed officials support the start of tapering as early as November.

However, gold prices are more likely to be muted on Tuesday because of Wednesday’s core inflation data for September and minutes from the Fed’s latest meeting.