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Price of Gold Fundamental Daily Forecast – Investors Take Profits in Reaction to Firmer Yields, Strong Stock Market

James Hyerczyk

Gold prices are under pressure on Monday shortly after the regular session opening in reaction to a jump in U.S. Treasury yields and a surging U.S. equity market. Both moves are encouraging investors to take profits in gold after spiking the market into a multi-year high last week. Traders are saying the catalyst behind the selling pressure is an easing of concerns over a U.S. recession.

At 12:22 GMT, December Comex gold is trading $1508.70, down $14.90 or -0.98%.

Helping to ease worries over a U.S. recession are stronger-than-expected U.S. economic data, a slight improvement in U.S.-China trade relations, and the anticipation of further stimulus from the major central banks.

Last week, a stronger-than-expected U.S. retail sales report helped put in the top in gold as it served as an indication that the U.S. economy was still showing trending growth. President Trump also helped pressure prices after he announced a delay in the tariffs until mid-December on several Chinese goods.

Over the week-end, President Trump and top White House officials dismissed concerns that economic growth may be faltering, saying they saw little risk of recession.

White House economic adviser Larry Kudlow pushed back on the notion that the U.S. economy is headed toward a recession.

“I don’t see a recession at all,” Kudlow said on Fox News Sunday. He added that there were no plans for additional fresh measures to boost the economy, and that the Trump administration would stay the course on its current agenda.

“Consumers are working. At higher wages. They are spending at a rapid pace. They’re actually saving also while they’re spending – that’s an ideal situation,” he said on NBC’s Meet the Press.

On CNN, President Trump’s Trade Adviser Peter Navarro disputed that the U.S. had seen an inverted yield curve, often a forerunner of recession because it signals market expectations for weaker growth ahead.

As far as U.S. trade negotiations are concerned, Kudlow said trade deputies from the United States and China would speak within 10 days and could advance negotiations over ending the trade dispute between the two economic powerhouses if those talks pan out.

Navarro added the U.S. still has “significant structural issues” with China, while Kudlow looked forward to a “substantive renewal” of talks with Beijing. He provided no specifics on the as-yet unrevealed “positive news” out of recent telephone talks between the two sides.

In other news, hedge funds and money managers trimmed their bullish stance in COMEX gold in the week to August 13, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

Daily Forecast

Gold prices could weaken for several days as traders trim positions ahead of the start of the central banker symposium at Jackson Hole, Wyoming. Since the main trend is up, the market is likely to fall until it runs into a value zone attractive enough to bring in new buyers. The first potential downside target is $1479.10 to $1463.30.

This article was originally posted on FX Empire

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