Gold Fundamental Forecast – December 22, 2016

Gold prices drifted sideways to lower on Wednesday. Volume was extremely low and traders failed to respond to the generally weaker U.S. Dollar and equity markets.

February Comex Gold futures closed at $1133.20, down $0.40 or -0.04%.

Holdings of the SPDR Gold Trust continued to decline on Wednesday, losing 0.43 percent to hit 824.54 tonnes. Holdings are down over 12 percent since November.

Forecast

Although a short-covering rally is possible today, the overall trend is down and over the long-run is expected to remain down because of the hawkish Fed and Trump’s proposed economic policies.

Today, investors will get a chance to react to several U.S. economic reports including Durable Goods, Final GDP and Weekly Unemployment Claims. Minor reports include the Home Price Index, Core PCE, Personal Spending, Personal Income and the CB Leading Index.

Core Durable Goods are expected to come in at 0.2%. Durable Goods Orders are expected to show a drop of 4.9%.

Quarterly Final GDP is expected to increase slightly from 3.2% to 3.3%. Weekly Unemployment Claims are forecast to come in at 255K, up slightly from the previous 254K.

The minor reports include Core PCE Price Index which is expected to come in unchanged at 0.1%. Personal Spending at 0.4%, up from 0.3%. Personal Income is forecast to come in slightly lower at 0.3%. Down from 0.6%.

Finally, the CB Leading Index is forecast to show an increase from 0.1% to 0.2%. The HPI is predicted to drop from 0.6% to 0.4%.

Traders should watch for volatility spikes today because of the reports, particularly the major Durable Goods and Final GDP. Both could trigger sharp moves in either direction if the headline numbers miss the forecasts.

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