Price of Gold Fundamental Daily Forecast – Traders Will Be Looking for Fed’s Response to Coronavirus Outbreak

Gold futures are trading mostly sideways on Wednesday as investors continue to assess the potential impact of the coronavirus on China’s economy and whether it will have a negative effect on the global economy. Additionally, some of the major players are sitting on the sidelines ahead of the Federal Reserve’s interest rate and monetary policy decisions later today.

At 18:14 GMT, April Comex gold is trading $1575.70, unchanged.

Slightly better demand for risky assets are helping to put a lid on gold prices. A stronger U.S. Dollar is also helping to pressure foreign demand for the dollar-denominated asset. However, weaker U.S. Treasury yields are helping to generate some support.

World Health Organization Holds Press Conference

Earlier today, the World Health Organization (WHO) reconvened the International Health Regulations Emergency Committee to discuss the coronavirus. The committee will help determine ‘whether the current outbreak constitutes a public health emergency of international concern,” Tedros said in a tweet.

Later, WHO officials said coronavirus spread outside of China is of ‘grave concern’.

The coronavirus has spread to a handful of people through human-to-human contact outside of China, Dr. Mike Ryan, executive director of the WHO’s health emergencies program, said at a news conference at the organizations Geneva headquarters Wednesday.

“These developments in terms of the evolution of the outbreak and further development of transmission, these are of grave concern and has spurred countries into action,” Ryan said, adding that he just returned from China on Wednesday. “What we know at this stage, this is still obviously a very active outbreak and information is being updated and changing by the hour.”

“Although the numbers outside China are still relatively small, they hold the potential for a much larger outbreak,” Tedros said.

What to Expect from the Fed

The U.S. Federal Reserve is expected to keep interest rates unchanged when it wraps up its first policy meeting of the year and the decade on Wednesday.

The Fed is currently I a holding pattern after trimming interest rates three times last year to boost the economy in the face of threats posed by slowing global growth and the U.S.-China trade war. But Fed officials have indicated they still see more chance of the economy softening than strengthening.

According to Reuters, here’s what the Fed is keeping an eye on as 2020 progresses.

• If job growth indicators become worrisome
• If U.S. economic growth slows below 2%
• If inflation heads the wrong way
• If the U.S.-China trade war re-escalates
• If the yield curve inverts or funding stress emerges again

Finally, as in the past, the Fed may be forced to deal with the consequences of an unexpected event. There is history – the Fed has changed the course of interest rates before due to surprise events.

The current surprise the Fed may be forced to deal with is China’s coronavirus outbreak. On January 27, the major U.S. stock indexes experienced their worst selloff in about four months on worries about the outbreak’s impact on Chinese and global growth as the death toll rose.

This news encouraged investors to bring forward estimates of a Fed rate move, with now roughly even odds the U.S. central bank will cut interest rates again by the end of July.