Price of Gold Fundamental Daily Forecast – Traders Watching Treasury Yields, U.S. Dollar, Risk Sentiment

Gold futures rallied on Monday as investors reacted to renewed tensions over North Korea. The market was also supported by doubts about U.S. President Trump’s ability to enact pro-business policies.

December Comex Gold futures settled the session at $1296.70, up $5.10 or +0.39%.

Investors flocked into the safe-haven gold market as they braced for North Korea’s response to computer-simulated military exercises begun by South Korean and U.S. forces on Monday that will continue into the end of the month.

The market remained underpinned by last week’s activity in Washington. Gold has become a more attractive asset since it looks as if Trump will not be able to push forward with his plan for tax reform and increased infrastructure spending.

Forecast

Gold prices are trading lower early Tuesday, mostly in reaction to stronger U.S. equity markets. Traders seem to be reacting positively to President Trump’s speech on Afghanistan.

Trump outlined a comprehensive new strategy on Monday night for achieving a “lasting peace” in Afghanistan – rejecting what he called “arbitrary timetables” for the U.S. troop presence, ratcheting up pressure on Pakistan to stop harboring militants and vowing to refocus the mission on “killing terrorists,” not nation-building.

“From now on, victory will have a clear definition:  attacking out enemies, obliterating ISIS, crushing Al Qaeda, preventing the Taliban from taking over Afghanistan, and stopping mass terror attacks against America,” Trump said in a primetime address to the nation.

In the absence of major economic reports, gold investors are likely to be more sensitive to political and geopolitical events particular Trump’s tax reform plan and rising tensions over North Korea.

Gold traders will also be focused on the direction of U.S. Treasury yields, the U.S. Dollar and risk sentiment. Bullish factors supporting gold will be lower Treasury yields, a weaker U.S. Dollar and lower demand for higher-risk assets. Bearish factors will be higher yields, a firmer dollar and risk-on investor sentiment.

Minor U.S. reports today include the Home Price Index and the Richmond Manufacturing Index. Traders are also preparing for key speeches by Fed Chair Janet Yellen and European Central Bank President Mario Draghi on Friday at the Jackson Hole central bankers’ symposium.