Price of Gold Fundamental Daily Forecast – Turns Higher as Dollar Pressured by Sterling Reversal

Based on the early price action, we’re likely to see more of the same sideways price action we’ve seen over the past week. Strong yields and rising demand for risk is likely to weigh on prices, but a weaker dollar could be supportive for dollar-denominated gold.
James Hyerczyk
Comex Gold

Gold futures are trading steady with below average volume on Monday as traders seek more clarity on Brexit and progress in U.S.-China trade relations. The market is also being supported by a weaker U.S. Dollar, but gains are being limited by higher U.S. Treasurys and increased demand for risky assets.

At 12:27 GMT, December Comex gold is trading $1494.60, up $0.50 or +0.04%. The trading range is $1497.70 to $1490.60. The market is also trading inside is October 11 price range for a sixth straight day, which suggest investor indecision and impending volatility. Translation:  Look for an expanded trading range within the next day or two. The move will likely be news driven.

Traders are paying close attention to the price action in the British Pound on Monday, which opened lower as investors dumped the Sterling on uncertainty over the outcome of the delayed vote on Brexit in the U.K. Parliament.

Despite the failure of Britain’s “super-Saturday” to live up to its billing when UK lawmakers delayed a vote on a reworked Brexit deal, there seemed to be tentative hopes that it would eventually be passed.

CNBC is reporting a lawmaker from the Northern Irish Democratic Unionist Party (DUP), whose votes could be vital to the deal passing, said it would not support a possible opposition party amendment to put the UK in a customs union with the European Union.

In other news, hedge funds and money managers cut their bullish positions in COMEX gold and silver contracts in the week to October 15, data from the Commodity Futures Trading Commission (CFTC) showed on Friday.

Daily Forecast

As far as the delayed Brexit vote over the weekend is concerned, “There was nothing massively surprising, there was always a doubt that the deal was not going to be passed…if we start to move towards a no-deal, then we can potentially see a knock on effect in terms of safe haven moves, but a possible extension for the deal reduces the chance for a no-deal Brexit,” Craig Erlam, OANDA senior market analyst, said.

Based on the early price action, we’re likely to see more of the same sideways price action we’ve seen over the past week. Strong yields and rising demand for risk is likely to weigh on prices, but a weaker dollar could be supportive for dollar-denominated gold.

Despite the limited movement, gold is likely to remain sensitive to any major developments over U.S.-China trade relations, and Brexit. At this time, there is hope for at least a partial trade agreement, but the situation remains tense as China would like to see the U.S. lift its tariffs before any major issues could be agreed upon.

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