Price of Gold Fundamental Daily Forecast – Watch for Geopolitical Surprise

Gold futures fell a little over 1 percent on Thursday, hitting its lowest level since July 18. The catalysts behind the selling pressure were a stronger U.S. Dollar, increased demand for higher risk assets and optimism about passage of a U.S. tax overhaul.

Domestically, the number of Americans filing for unemployment benefits unexpectedly fell last week, suggesting a rapid tightening of the labor market that bolsters expectations the Federal Reserve will raise interest rates next week.

February Comex Gold futures settled at $1253.10, down $13.00 or -1.03%.

The U.S. Dollar rose to its highest level against a basket of major currencies since November 21 on Thursday on increased risk appetite and optimism the U.S. Senate will successfully push through a tax reform program.

According to Reuters, U.S. Senate Republicans agreed to talks with the House of Representatives on sweeping tax legislation on Wednesday, amid early signs that lawmakers could bridge their differences and agree on a final bill ahead of a self-imposed December 22 deadline.

In other news, global outplacement consultancy Challenger, Gray & Christmas said U.S.-based employers announced plans to cut payrolls by 35,038 jobs in November. Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 236,000 for the week-ended December 2, the Labor Department said on Thursday. Economists had forecast claims rising to 240,000 in the latest week.

The major U.S. stock indexes rose on Thursday as investors returned for a second day following a slump earlier in the week. Most of the gains were fueled by strength in technology stocks.

Forecast

The broad-based fundamentals are bearish for gold, i.e. increasing demand for risky assets and expectations of higher interest rates. However, there are some external events that could create some interest on the long side.

According to CNBC, “Two U.S. B-1B heavy bombers joined large-scale combat drills over South Korea on Thursday amid warnings from North Korea that the exercises and U.S. threats have made the outbreak of war ‘an established fact’.”

Additionally, the Islamist group Hamas urged Palestinians on Thursday to abandon peace efforts and launch a new uprising against Israel in response to U.S. President Trump’s recognition of Jerusalem as its capital.

The daily chart pattern suggests investors should start preparing for the return of volatility since the major downside target is $1214.50 and the major upside target is $1272.30. This suggests we should be looking for some wild trading days over the near-term.