Price of Gold Fundamental Weekly Forecast – Jobs Report on Tap, but Traders More Concerned About U.S.-China Relations

Gold could continue to consolidate until an actual trade deal is signed and sealed. And the recent bills passed by the United States supporting anti-government protesters in Hong Kong remain a point of contention between Washington and Beijing.
James Hyerczyk
Comex Gold

Gold prices drifted lower on extremely low volume during the holiday-shortened week. Not only was the U.S. Thanksgiving holiday to blame for the light trade, but traders were also held hostage by the lack of fresh developments over trade talk negotiations.

The market started the week under pressure as optimism over a U.S.-China trade deal drove demand for higher-risk assets, sending the major stock indexes to record highs. Treasury yields also rose, making the U.S. Dollar a more attractive asset and driving down demand for dollar-denominated gold.

Last week, February Comex gold settled at $1465.60, down $4.90 or -0.33%.

Gold was under pressure early last week after a report said Chinese Vice Premier Liu He, U.S. Trade representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin discussed issues related to phase one of a trade deal and agreed to maintain communication on remaining issues.

Prices were also pressured after U.S. Federal Reserve Chairman Jerome Powell said policymakers had a favorable outlook on the U.S. economy. However, weak global growth and trade uncertainty are holding back expansion and they will “respond accordingly” if economic data leads to a “material reassessment” of their outlook, Powell added.

Gold hit its low for the week after doubts resurfaced about the progress of trade talks between China and the United States.

The market was further supported as investors bought the so-called safe-haven metal on doubts about whether the United States and China will seal a trade deal after President Donald Trump signed legislation supporting pro-democracy Hong Kong protesters.

Beijing condemned the move and said it would take “firm counter measures.”

Helping to keep a lid on gold prices was a raft of upbeat economic data from the United States. Economic growth picked up slightly in the third quarter, weekly jobless claims fell, while new orders for key U.S.-made capital goods increased.

Weekly Forecast

Gold could continue to consolidate until an actual trade deal is signed and sealed. And the recent bills passed by the United States supporting anti-government protesters in Hong Kong remain a point of contention between Washington and Beijing.

Additionally, although the U.S. economy is showing resiliency, many sections of the world are still showing slow economic growth.

This week, investors will get the opportunity to react on Monday to the latest ISM Manufacturing report. On Wednesday, the ADP Non-Farm Employment Change and ISM Non-Manufacturing PMI reports will be the centers of attention.

On Friday, the major report is U.S. Non-Farm Payrolls. The headline number is expected to show the economy added 189K jobs in November. The Unemployment Rate is expected to hold steady at 3.6% and Average Hourly Earnings are forecast to have risen 0.3%.

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