Price of Gold Fundamental Daily Forecast – Trump’s Warning to North Korea Boosts Gold Prices

A stronger U.S. Dollar helped drive gold prices lower on Tuesday, erasing some of Monday’s gains. A weaker Euro helped drive the dollar up against a basket of currencies as investors priced in the developing divergence in the monetary policies of the U.S. Federal Reserve and the European Central Bank.

December Comex gold settled at $1275.80, down $5.80 or -0.45%.

Mixed U.S. Treasury yields may have also contributed to the weakness in the gold market. The yield on the benchmark 10-year Treasury note fell to 2.313 percent, while the yield on the 30-year Treasury bond fell slightly to 2.776.

In other news, it was another light economic report day on Tuesday, giving investors the opportunity to react to speeches by FOMC Member Randal Quarles and Fed Chair Janet Yellen.

The IBD/TIPP Economic Optimism report came in above expectations at 53.6 versus a forecast of 51.2. The JOLTS Job Openings report was also better-than-expected at 6.09 million. The estimate was 5.98 million and the previous read was also 6.09 million.

In his first public speech, new Federal Reserve Governor Randal Quarles said that he believes the central bank needs to give serious consideration to what banking regulations need to be changed.

Fed Chair Janet Yellen also gave a speech on Tuesday and she also did not discuss monetary policy. She said that ethical behavior from the Fed allows the public to trust it is acting on its behalf.

Both speeches had no effect on gold prices since the Fed officials refrained from making any comments on monetary policy.

Forecast

Gold appears to be rangebound. Limiting its gains are expectations for rising interest rates, a firmer U.S. Dollar and strong demand for higher risk assets. Underpinning the market are geopolitical events in the Middle East, lingering tension over North Korea and concerns over tax reform.

Gold moved higher early Thursday after President Trump, speaking in South Korea, delivered more threats to North Korea.

Kim Jong Un’s regime “has interpreted America’s past restraint as weakness,” he said. “This would be a fatal miscalculation. This is a very different administration than the United States has had in the past.”

“Do not underestimate us, and do not try us,” Trump warned, urging the rogue nation to stop developing ballistic missiles and calling for it to dismantle its nuclear program.

“The weapons you are acquiring are not making you safer, they are putting your regime in grave danger,” the U.S. leader said in remarks directed to Kim. “Every step you take down this dark path increases the peril you face.”

Trump’s comments were enough to send investors into the safe haven gold market, boosting prices well ahead of the regular session opening.

On Wednesday, investors will continue to response to the direction of U.S. Treasury yields, the U.S. Dollar and U.S. stock markets, however, any weakness is likely to be limited because of concerns over North Korea.