Gold

Traders, analysts, and market participants have been intensely focused on who will be at the helm of the Federal Reserve come February of next year, as well as on the potential for a tax cut.

In late breaking news, Federal Reserve Governor Jerome Powell is seen as the leading contender to become the next Fed Chairman. According to Politico, “Federal Reserve Governor Jerome Powell is the leading candidate to become the chair of the U.S. central bank after President Donald Trump concluded a series of meetings with five finalists Thursday, three administration officials said.”

Although many analysts have cited U.S. dollar strength as a partial bearish force on gold prices today, that is not the case. Rather it is the risk-on environment prevalent in the U.S. equities markets, as the Dow Jones broke through and closed above 23,000 today, along with uncertainty as to who will head the Federal Reserve next year when Chairwoman Janet Yellen’s term concludes.

Gold closed today under dramatic pressure, losing $15 on the day with gold futures settling at $1288 per ounce. A combination of a strong U.S. dollar and a risk-on environment, created as the Dow Jones Industrial Average flirted with 23,000, caused many traders to doubt the ability for gold prices to hold value.

Although gold is trading under pressure today after breaking below a critical support area of $1300, it has recovered slightly from the intraday low which came in at $1292.50. As of 430 EDT, the most active gold futures contract (December 2017) is trading at $1296.90, a net loss of $7.70 (-0.58%) on the day.

Gold prices broke and closed above a critical resistance level when gold traded past $1300 this morning. As of 430 EDT, the most active gold futures contract (December 2017) gained $9.30 on the day to close at $1305.80. Spot gold closes $9.70 higher on the day, trading to $1302.80.

Gold continues to gain value as traders and market participants glean the minutes from last month’s FOMC meeting which were released yesterday. The probability of an interest rate hike in December remains high, an 87% probability based on the CME’s FedWatch Tool. This occurs in light of a U.S. equities market that continues to break records and close at new all-time highs.

The Federal Reserve released the minutes from its September meeting this morning. In essence, it showed that although there is still a high probability of an interest rate hike in December, that rate hike is not etched in stone.

Dollar weakness, as well as concerns regarding the current conflict between the United States and North Korea, have been supportive of gold pricing today. As of 4 o’clock EDT, gold futures are trading at $1291, up six dollars (+0.48) on the day. Trading to an intraday high of $1296.70 today, gold prices came within striking distance of $1300.

The war of words continues, as over the weekend statements made by leaders in both the United States and North Korea have once again taken this verbal conflict up another level. The war of words 2.0 continues.