Price of Gold Fundamental Weekly Forecast – Still Waiting for a Catalyst to Trigger a Breakout over $1307.00

Gold traded in a tight range all week as investors stood on the sidelines ahead of Friday’s speeches by Fed Chair Janet Yellen and European Central Bank President Mario Draghi.

December Comex Gold settled the week at $1297.90, up $6.30 or +0.49%.

After consolidating most of the week, gold prices rose on Friday after U.S. Federal Reserve Chair Janet Yellen made no mention of monetary policy in her much-anticipated speech at the central bankers’ conference at Jackson Hole, Wyoming.

Traders read this to mean Yellen is still concerned about weak inflation and that a rate hike later this year is not likely. This helped pressure U.S. Treasury yields and the U.S. Dollar, making dollar-denominated gold a more attractive investment.

The Euro soared to its highest level in more than two years against the U.S. Dollar after ECB President Mario Draghi did not express concern about the value of the single-currency in his speech at Jackson Hole. The weakness in the dollar helped extend the rally in gold.

Forecast

Tax reform is likely to be the major influence on gold prices this week. This is potentially bullish for U.S. stocks, Treasury yields and the U.S. Dollar, so gold’s gains may be limited or prices could decline.

President Donald Trump’s chief economic advisor Gary Cohn said the President will start publicly campaigning for highly-anticipated tax reform this week. Cohn told the Financial Times that Trump will begin calling for long-awaited reform next Wednesday when he visits Missouri.

Yellen’s speech was dovish so this is supportive for gold. Draghi may have helped the gold rally when he didn’t express any concerns over the value of the Euro.

The odds of a Fed rate hike in December are now well below 50%. This is also supportive for gold. However, I don’t think gold will be able to breakout to the upside over $1307.00 unless there is a steep sell-off in the U.S. stock market.

Other key reports this week are U.S Preliminary GDP on Wednesday. It is expected to show an increase of 2.7%, up slightly from the previous 2.6%.

On Friday, the U.S. will deliver its latest report on Non-Farm Payrolls. The headline number is expected to show the economy added 180K jobs. The Unemployment Rate is expected to come in at 4.3% and Average Hourly Earnings are expected to rise 0.2%, a little below the previous 0.3%.

The fundamentals are supportive for gold, but there has to be a catalyst to attract enough buyers to drive the market through $1307.00 and sustain the move.