Price of Gold Fundamental Daily Forecast – Traders Will Key Off Stock Market

Gold futures are trading steady early in the session on Monday as investors continue to assess the future of Donald Trump’s presidency. Helping to support gold prices lately has been a weaker U.S. Dollar. Helping to put a lid on its gains has been the strength of the U.S. equity markets.

There are no major economic events in the U.S. until Wednesday’s release of the latest Fed Monetary Policy Meeting Minutes the price action on Monday is likely to be dictated by speculators related to headlines.

These headlines could pertain to former FBI Director James Comey’s testimony before the Senate Intelligence Committee, sometime next week, after the U.S. Memorial Day holiday. Some headlines are likely to pertain to his campaign’s involvement with Russia in the alleged rigging of the U.S. presidential election.

Keep in mind that these headlines will continue to be pumped into the news by the media that some say are out to get Trump ousted from office. In the stories, unnamed sources will be mentioned. Whether they are true or not, gold investors will get the opportunity to react to them. Therefore, we should expect to see volatility and a possible two-sided trade.

The most important news will come be made by Comey over the short-run and eventually by the Special Prosecutor, appointed last week, when he finishes his investigation, and this could take months.

Last week, we saw some panic selling in the stock market and some panic short-covering in the gold market. However, once stocks recovered, gold prices topped and stabilized. I suspect that the direction of the stock market will continue to be the main driver of the price action in gold.

Despite its recent strong rally, the gold’s trend remains down. All we saw last week was the completion of a normal 50% to 61.8% retracement of its recent sell-off. In order to get really excited about the upside potential in gold, it is going to have to breakout over $1265.70 and sustain the move.

Sustaining the move means fresh buying as well as short-covering. Until we see evidence of aggressive counter-trend buying, we’re going to continue to see sellers come in on rallies. This is because the Fed is still likely to raise rates in June and higher interest rates are bearish for gold.

So today, watch the headlines and read the order flow and price action. Look for evidence of real buying if you’re thinking about playing the long side. If there is no follow-through to the upside because of a rally in stocks then look for a possible break into $1239.70 to $1233.70 before new buyers show up.