Price of Gold Fundamental Daily Forecast – Fed Speakers to Set the Tone This Week

Gold futures are trading flat on Monday on low volume. Due to a U.S. bank holiday, the Treasury market is closed and many of the major banks and institutions are sitting on the sidelines, leading to an early lackluster trade. A weaker U.S. Dollar, however, is helping to underpin the market.

At 11:48 GMT, August Comex gold is trading $1840.80, up $0.20 or +0.01%. On Friday, the SPDR Gold Shares ETF (GLD) settled at $171.26, down $1.43 or -0.83%.

Fundamentally speaking, worries about a global recession due to aggressive rate hikes from several major central is providing some support. However, there is just not enough evidence in the economic reports to say a recession is imminent. Nor is there enough weakness to encourage the central bank to pull in the reins on future aggressive rate hikes.

The current price action and the mixed fundamentals are likely to hold gold in a short-term range. That’s just another way of saying traders are waiting for the next catalyst to drive the price action.

Fed Speakers Likely to Drive the Volatility This Week

With the major economic reports out of the way, Federal Reserve speakers are likely to be the source of volatility this week.

Over the week-end, Fed Governor Christopher Wallers issued a few hawkish remarks. Waller on Saturday became the latest U.S. central banker to pledge a whatever-it-takes approach to fight inflation, days after the Fed raised interest rates by 75 basis points and signaled more hikes to come. Wallers’ remarks echoed similar statements from Federal Reserve Chairman Jerome Powell on Friday.

Limited Economic News This Week

The key report this week, in my opinion, is Friday’s University of Michigan Sentiment Index. It is expected to come in at an extremely low 50.2, matching an earlier estimate.

The rest of the week is filled with Federal Reserve speakers including St. Louis Fed President James Bullard at 16:45 GMT later today.

The highlight of the week is likely Fed Chair Jerome Powell’s testimony on monetary policy to the Senate Banking Committee on Wednesday and to the House Financial Services Committee on Thursday.

Daily Forecast

Trader reaction to a long-term Fibonacci level at $1844.00 is likely to set the tone on Monday. An upward bias to develop on a sustained move over this level with $1854.80 the first target. A downward bias is likely to develop on a sustained move under this level with $1837.30 and $1826.60 the key targets. We don’t expected a major move in either direction due to the below average volume.