Comex Gold

Price of Gold Fundamental Daily Forecast – Light Volume, Tapering Uncertainty Fuel Breakout Attempt

Gold futures are trading sharply higher on Monday with the move being fueled by a weaker U.S. Dollar and flat Treasury yields after an early rise faded. Thin-trading conditions may have also contributed to the move with most of the major players likely on the sidelines ahead of Federal Reserve Chairman Jerome Powell’s keynote speak on Friday at the central bankers’ symposium in Jackson Hole, Wyoming.

At 13:48 GMT, December Comex gold is trading $1807.30, up $23.30 or +1.31%.

Today’s rally raises many questions such as, “Are investors really going long, or did a bunch of buy stops get hit over $1800? Do investors now expect the Fed to downplay the possibility of an earlier tapering at Jackson Hole? “Is a rogue traders trying to take advantage of the thin trading conditions?

Looking at the price action over the last two months, I think it means traders still don’t know what the Fed has in store and that policymakers need to take a look at the August Non-Farm Payrolls and August consumer inflation reports before making a decision.

The charts are saying the market is straddling a couple of balance points or 50% levels. The longer-term 50% level is $1795.00. The shorter-term 50% level is $1800.00. This tends to support my conclusion that gold investors are waiting for more information.

Kaplan’s Dovish Comment May Be Spooking a Few Weak Shorts

Perhaps adding to the uncertainty over when and if the Fed will announce the start of its tapering of emergency stimulus may have been potentially dovish comments from Dallas Federal Reserve President Robert Kaplan.

Kaplan, among the U.S. central bank’s most forceful supporters for starting to reduce support for the economy, said on Friday he may need to adjust that view if the Delta variant of the coronavirus slows economic growth materially.

“It’s unfolding rapidly,” Kaplan said on Fox Business Network’s “Mornings with Maria” program.

“So far, it’s not having a material effect” on consumer activity like dining out, he said, but “it is having an effect in delaying return to office, it’s affecting the ability to hire workers because of fear of infection,” and may be affecting production output, he said.

Daily Forecast

Thin trading conditions and uncertainty usually means traders should prepare for volatility and the possibility of a two-sided trade.

If today’s breakout was real then buyers should come in to defend the $1800.00 level. If they don’t then look for a retest of $1795.00. If this fails to hold then look for another test of $1777.50.

For a look at all of today’s economic events, check out our economic calendar.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.