Canada Markets closed

Price of Gold Fundamental Daily Forecast – Priced-in Rate Cuts, Trade Talk Resumption Weighing on Prices

James Hyerczyk

Gold futures are inching higher on Monday after last week’s plunge was fueled by the liquidation of safe-haven assets as tensions between the United States and China eased. Demand for risky assets jumped last week after the United States and China agreed to resume trade talks in early October. This encouraged investors to reduce hedge positions in Treasurys, gold and the Japanese Yen.

At 12:07 GMT, December Comex gold is trading $1518.80, up $3.30 or +0.22%.

In the early trade, rising Treasury yields and higher stock index futures are helping to cap gains, while a weaker U.S. is underpinning the precious metal. Yields and stocks are being supported by positive comments from Federal Reserve Chairman Jerome Powell on Friday.

Powell Remarks Pressuring Gold

“The Fed has through the course of the year see fit to lower the expected path of interest rates,” he said. “That has supported the economy. That is one of the reasons why the outlook is still a favorable one.”

Powell also described the labor market as in “quite a strong position” and the consumer to be “strong” as well.

Powell went on to say, “We’re not forecasting or expecting a recession,” he said. “The most likely outlook is still moderate growth, a strong labor market and inflation continuing to move back up.”

“Our main expectation is not at all that there will be a recession,” Powell said.

Powell also pledged that the Fed will “continue to act as appropriate to sustain this expansion.”

Trend Still Up, but in Pause Mode

“Gold has been retreating because of risk appetite returning to the market, so the concerns (over U.S.-China trade ties and global growth) seem to be subdued,” Commerzbank analyst Eugen Weinberg said, adding that monetary easing by central banks could drive a rally in gold in the medium term.

“We’re likely to see a pause in the upward trend, but the trend is still intact.”

Hedge Funds Hike Bullish Positions

Hedge funds and money managers hiked their bullish positions in COMEX gold and silver contracts in the week to September 3, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. The survey was taken before last week’s big break.

Daily Forecast

We could see a two-sided trade on Monday as investors continue to transition before short-term bullish to short-term bearish.

While it is true that lower interest rates tend to drive up demand for gold, most of the rate cuts are already priced in for this year with the European Central Bank expected to cut rates and provide more stimulus on Thursday and the Fed expected to cut rates in a little more than a week. The Reserve Bank of Australia and the Reserve Bank of New Zealand are also expected to cut in October.

Since there aren’t expected to be any surprises from the major central banks and the U.S. and China preparing to resume trade talks in early October, I think gold is going to have a hard time rallying from current price levels. I expect a near-term break into a value zone.

This article was originally posted on FX Empire

More From FXEMPIRE:

  • Millions of Chinese Firms Face Collapse If Banks Don’t Act
    Finance
    Bloomberg

    Millions of Chinese Firms Face Collapse If Banks Don’t Act

    (Bloomberg) -- Brigita, a director at one of China’s largest car dealers, is running out of options. Her firm’s 100 outlets have been closed for about a month because of the coronavirus, cash reserves are dwindling and banks are reluctant to extend deadlines on billions of yuan in debt coming due over

  • China Pushes Factories to Reopen, Risking Renewed Virus Spread
    Finance
    Bloomberg

    China Pushes Factories to Reopen, Risking Renewed Virus Spread

    (Bloomberg) -- China is trying to get people back to work, risking a renewed spread of the coronavirus.Central and local governments are loosening the criteria for factories to resume operations as they walk a tightrope between containing a virus that has killed more than 2,400 people and preventing

  • Oil Slumps Most in Two Weeks as Global Virus Spread Quickens
    Finance
    Bloomberg

    Oil Slumps Most in Two Weeks as Global Virus Spread Quickens

    (Bloomberg) -- Oil slumped the most since Feb. 3 as a risk-off mood blanketed Asian markets after the global spread of the coronavirus quickened over the weekend.Brent futures fell as much as 3.3% in early Asian trading on Monday. Over the weekend, finance chiefs and central bankers from the world’s

  • U.S. Futures Plunge as Economic Worries Over Virus Intensify
    Finance
    Bloomberg

    U.S. Futures Plunge as Economic Worries Over Virus Intensify

    (Bloomberg) -- U.S. stock-index futures dropped Monday amid increased concern that the coronavirus could dent global growth.S&P 500 Index futures contracts expiring in March slid as much as 1.5% in early Asian trading after finance chiefs and central bankers from the world’s largest economies said they

  • Finance
    Bloomberg

    Trump Set for Hero’s Welcome With Modi at India Cricket Stadium

    (Bloomberg) -- President Donald Trump anticipates a hero’s welcome in India on Monday, but the glitzy events filling his two-day visit with Prime Minister Narendra Modi will paper over growing trade frictions.The visit is intended to strengthen the personal relationship between Trump and Modi, a fellow

  • Coronavirus, consumer sentiment, GDP, retail earnings: What to know in the week ahead
    Finance
    Yahoo Finance

    Coronavirus, consumer sentiment, GDP, retail earnings: What to know in the week ahead

    Coronavirus developments, consumer sentiment surveys, the second print on fourth-quarter U.S. gross domestic product and a slew of corporate earnings results will draw investor focus this week.

  • Stalled mega power project in central Mexico stirs discord
    Finance
    The Canadian Press

    Stalled mega power project in central Mexico stirs discord

    HUEXCA, Mexico — The thermo-electric plant looms over the smattering of homes and cows munching on dried corn stalks in Huexca, a tiny farm community in central Mexico where many residents view it as a sleeping monster ready to roar to life.During test runs of equipment in the still idle power plant,

  • U.S. Stock Futures Slide as Virus Concern Grows: Markets Wrap
    Finance
    Bloomberg

    U.S. Stock Futures Slide as Virus Concern Grows: Markets Wrap

    (Bloomberg) -- U.S. stock futures tumbled, with the caution that’s gripped financial markets lately showing no signs of letting up amid concern the coronavirus will hamper growth prospects. Gold surged.S&P 500 futures fell 1%. Australian bonds climbed with Treasury futures, while equity futures indicated

  • Hong Kong Sounds Warning; Italy Cancels Carnival: Virus Update
    Finance
    Bloomberg

    Hong Kong Sounds Warning; Italy Cancels Carnival: Virus Update

    (Bloomberg) -- The coronavirus continued its global human and economic destruction over the weekend, and the sense of caution in the financial markets showed no sign of letting up as Asian trading got underway.Hong Kong’s finance chief warned the city is being threatened by a “Tsunami-like cataclysm,

  • Alberta and two First Nations make deal for proposed oilsands mine
    Finance
    The Canadian Press

    Alberta and two First Nations make deal for proposed oilsands mine

    EDMONTON — The Alberta government has struck deals with two northern Alberta First Nations over a proposed open-pit oilsands mine that's awaiting Ottawa's approval.The Mikisew Cree and Athabasca Chipewyan First Nations had previously reached deals with Teck Resources Ltd. for the Frontier mine

  • World-Changing Virus, Climate Threats Dominate G-20 Gathering
    Finance
    Bloomberg

    World-Changing Virus, Climate Threats Dominate G-20 Gathering

    (Bloomberg) -- The Group of 20 meeting in Saudi Arabia should have marked a sigh of relief for global finance chiefs after trade tensions cooled and the global economy started to stabilize.The mood was quite different: A major new risk has emerged with the outbreak of the coronavirus, and each passing

  • Iran’s Election Turns Back the Clock on Reconciliation With West
    Finance
    Bloomberg

    Iran’s Election Turns Back the Clock on Reconciliation With West

    (Bloomberg) -- The victory by hard-liners in Iran’s election puts parliament back in the hands of people determined to turn the clock back on reconciliation with the West. Expect a retreat from commitments to the hollowed-out nuclear deal as the Islamic Republic’s economy bleeds from President Donald

  • Finance
    The Canadian Press

    Report says Intuit nearing $7 billion deal for Credit Karma

    NEW YORK — Intuit Inc. is reportedly close to a $7 billion deal to acquire personal-finance portal Credit Karma Inc. and beef up its position in the consumer-finance market.The Wall Street Journal, citing sources familiar with the talks, reported Sunday that a deal involving cash and stock could be announced

  • As Pandemic Looms, World’s Top Disease Fighter Engages Xi
    Finance
    Bloomberg

    As Pandemic Looms, World’s Top Disease Fighter Engages Xi

    (Bloomberg) -- Tedros Adhanom Ghebreyesus has perhaps the most thankless job in global public health. As director-general of the World Health Organization, the former Ethiopian health minister is racing against time to prevent a dangerous new coronavirus in China from precipitating a worldwide pandemic.Yet

  • Virus Outbreak Exposes $46 Billion Rift in China’s Tech Industry
    Finance
    Bloomberg

    Virus Outbreak Exposes $46 Billion Rift in China’s Tech Industry

    (Bloomberg) -- The coronavirus epidemic is exposing the dichotomy of the world’s second largest tech economy. Chinese businesses like Alibaba and Meituan with outsized footprints in the material world are rushing to contain the fallout while virtual denizens ByteDance Inc. and Tencent Holdings Ltd. ride

  • China Developers Face Cash Crunch as Virus Freezes Home Sales
    Finance
    Bloomberg

    China Developers Face Cash Crunch as Virus Freezes Home Sales

    (Bloomberg) -- China’s debt-laden developers are facing a cash-crunch as the coronavirus outbreak brings the property market to its knees.Most builders have a cash buffer of just three months, according to the China Real Estate Chamber of Commerce, one of the nation’s largest developer associations.

  • U.K. Passengers Infected; Italy Halts Carnival: Virus Update
    Finance
    Bloomberg

    U.K. Passengers Infected; Italy Halts Carnival: Virus Update

    (Bloomberg) -- Italy canceled public events in the north of the country including the Venice Carnival after coronavirus infections rose to 140 and a travel ban affecting about 50,000 people southeast of Milan was implemented. South Korea raised the country’s infectious-disease alert to the highest level

  • Skeptic of world being round dies in California rocket crash
    Finance
    The Canadian Press

    Skeptic of world being round dies in California rocket crash

    BARSTOW, Calif. — A California man who said he wanted to fly to the edge of outer space to see if the world is round has died after his home-built rocket blasted off into the desert sky and plunged back to earth.“Mad" Mike Hughes was killed on Saturday afternoon after his rocket crashed on private

  • Finance
    Bloomberg

    Mnuchin Spurns Investors’ Calls to Coordinate More With Fed

    (Bloomberg) -- U.S. Treasury Secretary Steven Mnuchin said he sees no need to boost coordination between the government and the Federal Reserve, rebuffing investors who’ve called for more cooperation as central bankers run out of tools to counter the next recession.JPMorgan Chase & Co.’s Jamie Dimon,

  • Finance
    Bloomberg

    EM Review: Spread of Coronavirus Beyond China Saps Risk Appetite

    (Bloomberg) -- Emerging-market currencies had their worst week since August and stocks fell on mounting evidence that the coronavirus outbreak is taking a toll on corporate earnings and the global economy. The dollar surged and most developing-nation currencies weakened, led by Brazil’s real and South

  • The Bond Rally in Emerging Markets May Not Be All That It Seems
    Finance
    Bloomberg

    The Bond Rally in Emerging Markets May Not Be All That It Seems

    (Bloomberg) -- Emerging-market bonds are on fire but there there’s a worrying subtext to the rally.While the dollar-denominated debt of developing nations advanced for an 11th week in the five days through Friday, the longest winning streak in eight years, indexes of stocks and currencies retreated as

  • The Australian Dollar Nears a Tipping Point Thanks to Ultra-Low Rates
    Finance
    Bloomberg

    The Australian Dollar Nears a Tipping Point Thanks to Ultra-Low Rates

    (Bloomberg) -- A decade-long slide in Australian interest rates is threatening to turn one of the global currency market’s most popular wagers on its head.Investors with an appetite for a little risk had a winner for years with a carry trade that saw them borrow trillions of yen at near-zero rates and

  • Finance
    The Canadian Press

    US gas prices steady at $2.53 per gallon over past 2 weeks

    CAMARILLO, Calif. — The average U.S. price of regular-grade gasoline remained steady at $2.53 per gallon over the past two weeks.Industry analyst Trilby Lundberg of the Lundberg Survey said Sunday that the price at the pump averages 9 cents higher than it was a year ago.The highest average price in the

  • JPMorgan to Start U.K. Digital Consumer Bank, Sky Reports
    Finance
    Bloomberg

    JPMorgan to Start U.K. Digital Consumer Bank, Sky Reports

    (Bloomberg) -- JPMorgan Chase & Co. is planning to enter the U.K. consumer-banking market in the next few months, offering a range of savings and loan products under its Chase brand, Sky News reported, citing unidentified sources.The Wall Street stalwart has been in discussions with regulators about

  • Kiwi Heads South on Bets That RBNZ Will Flip-Flop and Cut Rates
    Finance

    Kiwi Heads South on Bets That RBNZ Will Flip-Flop and Cut Rates

    (Bloomberg) -- Bearish investors are betting that the Reserve Bank of New Zealand will flip-flop again and cut interest rates this year. If economic data this week backs their case, the kiwi is likely to face more selling pressure.While the currency staged a strong one-day rally on Feb. 12 when the central