Price of Gold Fundamental Daily Forecast – Traders Waiting for Trump to Make Fed Chair Decision

Gold prices continued to retreat on Tuesday as a stronger U.S. Dollar encouraged investors to take profits after the recent rally drove gold to multi-week highs. Losses may have been limited, however, by concerns over geopolitical tensions in the Middle East and the Korean peninsula.

December Comex Gold futures settled at $1286.20, down $16.80 or -1.29%.

The dollar was supported by reports that President Donald Trump was favoring a monetary policy hawk as the next head of the U.S. Federal Reserve.

In other news, Boston Fed President Eric Rosengren said the Fed will probably need to raise interest rates in December and then three or four times “over the course of next year”, assuming the U.S. unemployment rate continues to fall and inflation rises.

Forecast

Gold prices were trading marginally higher early Wednesday in reaction to a steady U.S. Dollar and geopolitical concerns in the Middle East.

The price action the rest of the session is likely to be determined by speculation that President Trump might pick a new Fed Chairman who is hawkishly inclined. However, some investors are downplaying this news because Trump is scheduled to meet with current Fed Chair Janet Yellen on Thursday.

There are also reports that Asian traders are backing away from the gold market as they wait to see what policies might emerge from China’s Communist Party conference.

As far as the new Fed Chair is concerned, there are reports that President Trump has a pool of five candidates to choose from for the next chair of the Federal Reserve and is likely to announce his choice before going to Asia in early November.

According to a Reuters poll, a slim majority of economists think Jerome Powell is likely to be the next Federal Reserve Chairman, but most said Fed Chair Janet Yellen would be the best option. Until Trump makes his choice, this issue is likely to cause much speculation and volatility in the U.S. Dollar and gold markets.

On Wednesday, investors will get the opportunity to react to the reports on Building Permits and Housing Starts. The Fed will release its Beige Book and the government will release the Federal Budget Balance.

FOMC Members Dudley and Kaplan are scheduled to deliver speeches. Traders will react to any comments about monetary policy. Most expect the Fed policymakers to say they will support a rate hike in December if inflation and the labor market continue to improve.

Any news that supports a rate hike will weigh on gold prices, but losses are likely to be limited if the situation between Iraq and the Kurds escalates, or if tensions rise over North Korea.