Price of Gold Fundamental Daily Forecast – Testing Major Support at $1781.00 – $1757.10 Ahead of Fed Minutes

Gold futures are putting in a mixed-to-lower performance on below average volume shortly after the New York opening on Wednesday. This puts it in a position to post its fifth consecutive session of losses. The catalysts behind the weakness are firming Treasury yields and a stronger U.S. Dollar.

At 13:46 GMT, February Comex gold is trading $1788.50, up $2.20 or +0.12%.

Technically, the market is headed into a major retracement zone at $1781.00 to $1757.10. A test of this zone could encourage short-sellers to cover positions and aggressive new buyers to re-enter on the long side. This could produce a late session reversal to the downside.

The low pre-holiday volume could trigger volatile moves throughout the session with many of the major players on the sidelines ahead of Thursday’s U.S. Thanksgiving holiday. Don’t expect much of a change in volume on Friday either. We’re basically looking for an extended holiday weekend.

Limited Reaction to Early Economic Releases

Gold traders are showing a limited reaction to early U.S. economic data with most traders focused on the 15:00 GMT reports on inflation, personal income and personal spending. Some traders are waiting for the Fed minutes at 19:00 GMT, but volume may be so low at that time to generate any strong reaction in either direction.

In economic news, U.S. jobless claims tumbled to 199,000 last week, hitting their lowest level in more than 52 years, the Labor Department reported Wednesday. The report easily beat Dow Jones estimates of 260,000.

However, other data points on Wednesday weren’t as solid. Census Bureau said durable goods orders showed an unexpected decline in October. Meanwhile, the third-quarter GDP was revised up slightly to 2.1%, but it missed an estimate of 2.2%.

Daily Forecast

Watch for a possible reversal to the upside on a test of $1781.00 to $1757.10. I know, it’s a wide range but it is what it is. At a minimum, shorts will start covering on a test of this area. It’s a long shot, but aggressive buyers could come in on a test of this area too.

The Fed is due to release the minutes from its November meeting at 19:00 GMT.

In the latest meeting, the central bank confirmed its plans to start tapering its $120 billion monthly bond-buying program, so investors will be poring over the minutes for further details.

The Fed tried its best to tell investors that the tapering of stimulus had nothing to do with the timing of rate hikes. But lately Fed speakers have been linking the two together.

Investors are now convinced that the faster the Fed tapers, the sooner it will begin raising rates.