Comex Gold

Price of Gold Fundamental Weekly Forecast – Volatile Trade Expected as Traders Try to Predict Fed’s Next Move

Gold futures finished higher last week after some analysts blessed the market with the dreaded bear market label at the start of the week, following a steep sell-off. They likely made this call in reaction to the robust U.S. jobs report on August 6, but most have forgotten about the CPI and PPI reports as well as the surprisingly weak U.S. consumer sentiment report.

With the market closing back above its August 6 finish, all of the bearishness from the Non-Farm Payrolls report was wiped out, leading this analyst to believe it means we know nothing more about the Fed’s intentions at the start of this week than we knew a week ago.

Last week, December Comex gold settled at $1778.20, down $15.10 or -0.86%.

Essentially, after the release of the major reports last week, gold traders have doubts over the timing of the Fed’s plan to begin tapering its asset buying program. This likely means we’ll see more of the same wild swings over the near-term and perhaps into the next Fed meeting on September 21-22.

By then, traders and Fed policymakers will have seen another Non-Farm Payrolls report, another consumer inflation report, another producer inflation report and another University of Michigan Consumer Sentiment report.

Weekly Outlook

This week investor focus will remain on U.S. economic reports and Fed speakers. Traders will be looking for clues as to if and when the central bank will begin tapering.

The major events out of the U.S. are Tuesday’s retail sales report and Federal Reserve Chairman Jerome Powell’s speech. On Wednesday, the Fed will release the minutes from its July monetary policy meeting.

Minor reports include the Empire State Manufacturing Index, Industrial Production, Capacity Utilization, Building Permits, Housing Starts, the Philly Fed Manufacturing Index and weekly unemployment claims.

The most important influences on the direction of gold will be the direction of the 10-year U.S. Treasury yield and the U.S. Dollar.  On Friday, the yield dropped below 1.3%. Continued weakness this week could drag the U.S. Dollar lower, while increasing demand for dollar-denominated gold.

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.