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Price of Gold Fundamental Daily Forecast – Pressured After Senate Passes Budget, Moving Republicans Closer to Tax Reform

Gold prices recovered on Thursday after hitting their lowest level in more than a week. The short-covering rally was strong enough to produce a potentially bullish technical pattern on the charts.

December Comex Gold futures settled at $1290.00, up $7.00 or +0.55%.

The early session weakness was fueled by firmer U.S. Treasury yields, however, the market made a dramatic turnaround after stocks plunged in Asia and Europe. This sent investors scrambling out of risky assets and into the safe haven gold market.

Nervousness over political turmoil in Spain may have also been responsible for the price recovery.

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By the end of the session, gold was being supported by a weaker U.S. Dollar as investors responded to falling Treasury yields and speculation that Trump was going to appoint a less-hawkish Fed Chair.

In other news, investors had the opportunity to react to Weekly Unemployment Claims, the Philadelphia Fed Manufacturing Index and the Conference Board’s Leading Index.

According to the U.S. Department of Labor, in the week-ending October 14, the advance figure for seasonally adjusted initial claims was 222,000, a decrease of 22,000 from the previous week’s revised level. This is the lowest level for initial claims since March 31, 1973 when it was 222,000. The number was better than the 240,000 forecast.

The Philadelphia Fed Manufacturing Index came in at 27.9, beating the 21.9 forecast. The Conference Board’s Leading Index fell 0.2% versus a forecast of 0.1%.

Gold prices were supported on Thursday after U.S. Treasury yields fell despite the better-than-expected economic data. Instead of reacting to the economic reports, yields fell following a report that President Donald Trump was leaning toward Jerome Powell as the next chair of the Federal Reserve. Earlier in the week, yields rose as speculators bet Trump would appoint a more hawkish Fed Chair.

On Thursday, Trump interviewed current Fed Chair Janet Yellen. Some say it’s her job if she wants to take it. This may be good for the economy and the markets because of the continuation factor. However, there are still some investors who believe Trump is leaning towards more hawkish candidates, Fed Governor Kevin Warsh and economist John Taylor.

Gold
Daily December Comex Gold

Forecast

Gold prices are under pressure early Friday in a move that could extend into the start of the regular U.S. trading session later in the day. A stronger U.S. Dollar and increased demand for higher risk assets are behind the weakness.

The dollar firmed and stocks rose after the U.S. Senate approved a budget blueprint for the 2018 fiscal year that will pave the way for Republicans to pursue a tax-cut package without Democratic support.

According to reports, the Republican-controlled Senate voted for the budget measure late on Thursday by 51-to-49, which would add up to $1.5 trillion to the federal deficit over the next decade in order to pay for proposed tax cuts.

This news is also helping to boost U.S. Treasury yields which tends to put pressure on gold prices since the precious metal doesn’t pay interest or a dividend to hold it.

Gold prices looked poised to move lower. However, losses may be limited by geopolitical concerns over North Korea.

This article was originally posted on FX Empire

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