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Price of Gold Fundamental Weekly Forecast – Investors Responding to Low U.S. Growth Potential

James Hyerczyk

Gold futures surged last week to their highest level since December 4 while posting its strongest weekly performance since mid-October. A weaker U.S. Dollar and strong demand for palladium and platinum were the catalysts behind last week’s rally.

February Comex Gold futures settled at $1278.80, up $21.30 or +1.69%.

Some traders said that gold was attracting buying due to a cyclical bottom. Thin pre-holiday volume may have also been behind the rally due to the lack of sellers.

Weaker-than-expected U.S. economic data was also supportive. Final U.S. GDP came in at 3.2%, below the 3.3% estimate and previous read. Weekly Unemployment Claims also came in higher than expected.

Core Durable Goods Orders also failed to live up to expectations. They came in at -0.1%, well below the 0.5% forecast. Last month’s number was revised higher to 0.9%. Durable Goods Orders came in at 1.3%. This was also below the 2.1% estimate.

The Core PCE Price Index was 0.1%. This matched the estimate, but it was lower than the previously reported 0.2%. Personal Spending rose 0.6%, beating the 0.5% forecast. However, the previous month’s report was revised lower to 0.2%.

Gold traders showed little response to the passing of the U.S. tax reform bill which was likely already priced into the market.

Weekly February Comex Gold


U.S. growth prospects dimmed on Friday as data showed spending outpaced income in November. This likely means the Fed is not going to get overly aggressive anytime soon when the inflation metric is well below target. This is potentially bullish for gold and this thought was reflected in Friday’s strong rally.

We’re expecting more low volume days this week as the holiday trade is likely to continue beyond New Year’s Day.

The key economic reports this week include Conference Board Consumer Confidence and Pending Home Sales on Wednesday.

Thursday will feature Weekly Unemployment Claims and Chicago PMI.

This article was originally posted on FX Empire