Price of Gold Fundamental Daily Forecast – Stimulus Stalemate Generating Rangebound Trade
Gold futures are posting a choppy, two-sided trade early Tuesday, with the price action manipulated by a stalemate in Washington over coronavirus aid and a fresh wave of COVID-19 infections that threaten to further slow down a global economic recovery from the pandemic. Both factors are having an impact on demand for the safe-haven U.S. Dollar and risk sentiment, which ultimately controls the direction of gold.
At 11:07 GMT, December Comex gold is trading $1902.80, down $2.90 or -0.15%.
The price action merely reflects the current short-term outlook for the market given all the uncertainty, ranging from a surge in the COVID-19 cases to the coronavirus-aid impasse to the November 3 presidential election. But in a way, it also reflects the longer-term bullish outlook that is being well-supported by the accommodative central banks.
So while we may have to put up with short-term volatile swings in the market, I think most investors are confident that the longer-term up trend will remain intact until the central banks start to tighten again and that is not expected to happen for 2 to 3 years.
Next week, the Reserve Bank of Australia (RBA) is planning to further reduce rates from 0.25% to 0.10%, and announce a program to buy longer-dated bonds in an effort to solidify Australia’s economic recovery. That should serve as further confirmation to bullish gold traders that the market is going to be well-supported over the long-run.
Daily Forecast
While most of the attention will be on demand for risky assets over the near-term, there are a few economic releases on Tuesday that could rattle the volatility somewhat.
At 12:30 GMT, the U.S. Core Durable Goods Orders report is expected to come in at 0.3%, down from 0.6%. Durable Goods Orders are expected to come in at 0.5%, unchanged from the previous read.
At 13:00 GMT, the Home Price Index (HPI) is expected to post a gain of 0.7%, down from the previously reported 1.0%. The S&P/CS Composite-20 HPI is expected to show a rise of 4.2% from 3.9%.
At 14:00 GMT, the Conference Board’s Consumer Confidence report is expected to show an increase from 101.8 to 102.1 and the Richmond Manufacturing Index is expected to dip from 21 to 18.
Lower than expected data could provide support for gold because it is likely to increase the urgency of getting the stimulus package approved in a timely manner. At this time, it’s not a matter of if there is going to be stimulus, but a matter of when and how big the coronavirus-aid package will be.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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