Price of Gold Fundamental Weekly Forecast – Overextended Rally: Needs Weaker Dollar to Sustain the Move.

The price action in gold this week will once again be controlled by the direction of the U.S. Dollar. The dollar will be largely influenced by President Trump’s State of the Union speech on Tuesday Night.

Gold futures continued to push towards the highs of mid-2016 and threatened to break out to levels not seen since 2013 last week in response to a weaker U.S. Dollar.

Forecast

The price action this week will once again be controlled by the direction of the U.S. Dollar. The dollar will be largely influenced by President Trump’s State of the Union speech on Tuesday, January 30 at 9:00 Eastern (0200 GMT Wednesday). Once again, a weaker dollar will be bullish for gold and a stronger dollar bearish for gold.

Traders should expect Trump to talk about the positives in the economy. This may trigger a strong recovery in the dollar, at least over the short-run. This would be bearish for gold.

The Fed will issue its monetary policy statement on January 31. The central bank is not expected to raise interest rates. Traders will be looking for the Fed’s assessment of the economy, inflation and its outlook for future rate hikes.

Finally, investors will also get the opportunity to react to the latest data on employment in Friday’s U.S. Non-Farm Payrolls report. The headline number is expected to show the economy added 184K jobs in January, up from 148K in December. Average Hourly Earnings are expected to increase 0.3% and the Unemployment Rate is expected to remain at 4.1%.

– FX Empire-

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Posted in Gold.