Price of Gold Fundamental Daily Forecast – Less than 25% Tariff Could Be Supportive for Gold Prices

Gold futures are edging higher early Monday. Bargain-hunters are supporting the market, while lingering trade concerns are helping to limit gains. Volume and volatility are relatively light as investors seek clues as to the direction of today’s trade. Technically, the trend is up according to the short-term charts, but a clearly defined resistance area has been preventing further upside movement since the last major top at $1220.70 on August 28.

At 0825 GMT, December Comex Gold is trading $1201.20, up $0.10 or +0.01%.

It’s business as usual for most traders as dollar-denominated gold is mirroring the movement in the greenback. U.S. Dollar traders seem to be reacting to falling Treasury yields after Friday’s strong performance saw the U.S. 10-year Treasury note overcome the psychological 3.0 percent level for the first time since early August.

In other news from last week, according to the U.S. Commodity Futures Trading Commission, investors trimmed their net short position in Comex gold and silver in the week to September 11.

Forecast

The limited movement early in the session suggests that gold traders are waiting for some news. Last week, the market was boosted by reports of lower-than-expected producer and consumer inflation, but these gains were offset on Friday by strong retail sales and consumer sentiment reports.

Today, investors will get the opportunity to react to the latest Empire State Manufacturing Index, but this report is hardly a market moving event. Also Fed speakers are on quiet time as they prepare for the next week’s two-day meeting on September 25 – 26 so we won’t get any additional commentary on monetary policy.

No, gold traders are waiting for U.S. President Trump to announce new tariffs on about $200 billion in Chinese imports as early as today. Gold traders seem to be accepting of the idea of new tariffs. Therefore, I think the size of the tariffs will be the issue that triggers a reaction by gold traders.

According to The Wall Street Journal, the tariffs are expected to be set at around 10%, according to people familiar with the matter, a lower level than the possibility of 25% tariffs previously floated by the administration.

Bearish gold traders are probably pricing in the full 25% tariff so anything less may encourage them to cover their short-positions. This could drive prices higher today. If Trump hits China with the full tariff then look for weakness today.