Gold Jumps as Concerns Over North Korea, Syria Spook Investors

Gold is unchanged on Wednesday, following strong gains in the Tuesday session. In North American trade, gold is trading at $1275.04 per ounce. On the release front, here are no major events on the schedule. President Donald Trump will conduct an interview with the Fox Business Network, and will discuss health care, tax reform, and flash-points in North Korea and Syria. On Thursday, the US releases three key indicators – PPI, unemployment claims and UoM Consumer Sentiment.

With geopolitical tensions taking a bite of out risk appetite, gold prices have surged higher. On Wednesday, gold pushed above $1279, its highest level since November 1. The safe-haven asset jumped 1.7 percent on Tuesday, as nervous investors snapped up the base metal due to increasing tensions over Syria and North Korea. The US bombed a Syrian military base last week, in response to a chemical attack by Syrian warplanes. Russia has strongly condemned the US move, chilling relations even further between the US and Russia. President Trump has also sent warships to the Korea peninsula, in a show of strength against North Korea, which continues to test ballistic missiles in defiance of the international community. If tensions escalate on either of these fronts, gold prices could surge to higher levels.

On Monday, Federal Reserve Chair Janet Yellen said that with the economy close to full employment and 2 percent inflation, Fed policymakers were looking to reduce the support that the central bank was providing the economy. The minutes of the March meeting indicated that the Fed plans to trim the $4.5 trillion balance sheet, which has ballooned as a result of the huge asset-purchase program which started in 2008. The Fed plans to raise rates twice more in 2017, with the next rate expected in June. Yellen emphasized that the Fed’s policy stance is neutral, as interest rate increases will be gradual, given that the economy is growing at a moderate pace.

XAU/USD Fundamentals

Wednesday (April 12)

  • 10:00 US President Trump Speech

Thursday (April 13)

  • 12:30 US PPI. Estimate 0.0%
  • 12:30 US Unemployment Claims. Estimate 242K
  • 14:00 US Preliminary UoM Consumer Sentiment. Estimate 97.1

*All release times are GMT

*Key events are in bold

XAU/USD for Wednesday, April 12, 2017

XAU/USD April 12 at 13:25 EST

Open: 1276.61 High: 1279.84 Low: 1271.81 Close: 1275.04

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1199 1232 1260 1285 1307 1337
  • XAU/USD has showed limited movement in the Wednesday session
  • 1260 is providing support
  • 1285 is the next resistance line
  • Current range: 1260 to 1285

Further levels in both directions:

  • Below: 1260, 1232, 1199 and 1174
  • Above: 1285, 1307, 1337

OANDA’s Open Positions Ratio

In the Wednesday session, long positions have a slender majority (52%). This is indicative of trader bias towards XAU/USD breaking out and moving higher.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.