Price of Gold Fundamental Daily Forecast – Weak as Fiscal Stimulus Off the Table Until Trump Concedes ElectionExpectations that the Federal Reserve will increase stimulus continue to grow, but that is a long-term bullish indicator.
Gold futures are trading lower on Thursday as investors looking for safety, bid up the U.S. Dollar, driving down demand for the dollar-denominated asset. Traders are saying that the greenback regained last week’s upside momentum as optimism over a coronavirus vaccine eroded.
Fear that the surge in coronavirus cases in the United States would lead to more economic restrictions and threaten the recovery, also weighed on demand for gold. The biggest bearish influence on the metal, in my opinion, is the lack of progress toward a new fiscal stimulus package.
Trading Derivatives carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary. A Product Disclosure Statement (PDS) can be obtained either from this website or on request from our offices and should be considered before entering into a transaction with us. Raw Spread accounts offer spreads from 0.0 pips with a commission charge of USD $3.50 per 100k traded. Standard account offer spreads from 1 pips with no additional commission charges. Spreads on CFD indices start at 0.4 points. The information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
At 14:16 GMT, December gold futures are trading $1856.50, down $17.40 or -0.93%.
The Dollar’s Safe-Haven Appeal
The dollar is up on Thursday against it rivals, benefiting from uncertainties over a spike in new coronavirus cases in the United States and resultant restrictions.
Rising coronavirus cases in the United States, Japan and Russia too helped offset the optimism from promising vaccine announcements from Pfizer and Moderna.
Central Banks to the Rescue
With government’s stubbornly limiting new fiscal stimulus measures, the global economy risks economic damage due to the impact of the rising virus cases. This means the major central banks are going to have to do the “heavy-lifting” over the short-run.
Jobless Claims Rise as US Labor Market Continues to Struggle
The pace of workers filing for unemployment claims picked up last week and was a bit higher than Wall Street had been expecting. Jobless claims totaled 742,000 for the week, the Labor Department reported Thursday, ahead of the 710,000 estimate from economists surveyed by Dow Jones.
That total also represented an acceleration from the previous week’s total of 709,000 and a continuation of the job market struggles since the coronavirus pandemic hit in early March.
The week-over-week increase was the first after four straight weeks of decline. Even with the increase for the most recent period, the four-week moving average, which smooths volatility in the numbers, decreased 13,750 to 742,000.
Continuing claims, which trail by a week, took another substantial drop, falling 429,000 to 6.37 million, a fresh pandemic-era low.
Expectations that the Federal Reserve will increase stimulus continue to grow, but that is a long-term bullish indicator. What short-term gold traders want is fiscal stimulus.
On Wednesday, U.S. President elect Joe Biden expressed hope that Republicans in Congress would be more inclined to move forward on COVID-19 relief legislation after President Donald Trump leaves office in January.
That may be as good as it gets for short-term gold traders at this time because fiscal stimulus is going to remain a bearish issue because Trump hasn’t yet conceded the election. Meanwhile, fiscal stimulus remains far away until that matter is settled.
For a look at all of today’s economic events, check out our economic calendar.