Price of Gold Fundamental Daily Forecast - Gold Needs Bullish Surprise to Continue Rally

Gold futures are trading lower early Thursday as investors awaited news that could determine the market's direction the rest of the session. During the previous session, the market was under pressure after nearly reaching a seven-month high during Tuesday's session.

August Comex gold futures settled at $1289.50, down $8.00 or -0.62%.

Although the market is still being underpinned by geopolitical concerns created by an election in the U.K., a European Central Bank monetary policy announcement and the testimony by former FBI Director James Comey to the U.S. Senate Intelligence Committee, Wednesday's price action suggests that there may be an easing of tensions.

Light trading volume weighed on gold prices as bullish investors took a break ahead of Thursday's major events. Gold was also pressured by a stronger U.S. Dollar, which rose in response to a weaker Euro. The weakness in the Euro was fueled by a report that the European Central Bank was preparing to cut its inflation forecasts on Thursday.

Gold investors may have also reacted to reports that suggested the testimony from former FBI chief James Comey will be less damaging to President Trump than previously feared. On Wednesday, the U.S. Senate Intelligence Committee released a copy of Comey's opening remarks. There were some revelations, but nothing to suggest the President obstructed justice.

This news may have also pressured the safe-have gold and Japanese Yen markets while helping to boost U.S. stocks.

A rise in U.S. Treasury yields may have also pressured gold prices. U.S. government debt prices were slightly lower on Wednesday, as investors squared positions ahead of Thursday's trio of major events. The yield on the benchmark 10-year Treasury Note came in at around 2.1755 percent, while the yield on the 30-year Bond rose to 2.8366 percent.

Forecast

The wind was taken out of the sail of bullish investors on Wednesday with the release of a report by Bloomberg that the ECB may lower its inflation outlook and the reduce of Comey's statement suggesting Trump may have made some dumb mistakes, but did not break the law.

In my opinion, by default, this makes the outcome of the U.K. elections the key event that could move the gold market today. The election is essentially a toss-up at this point, if Prime Minister Theresa May wins then gold is likely to be pressured. However, a loss by May could drive prices lower because it will raise concerns over the Brexit negotiations.

The recent run up to nearly $1300, suggests gold investors may have already priced in at least some bullish news. If all three events turn out to be bearish then gold could plunge back to at least the $1268.80 to $1259.10 area.