Gold Rally Continues on North Korea Jitters

Gold continues to make gains against the dollar, and has moved higher for a third consecutive day. In North American trade, spot gold is trading at $1314.58, up 0.35% on the day. In economic news, CB Consumer Confidence improved to 122.9, above the forecast of 120.9 points. On Wednesday, the US releases two key events – ADP Nonfarm Employment Change and Preliminary GDP for the second quarter. The markets are expecting a strong gain of 2.7% from GDP, and a surprise reading could have a strong impact on gold prices.

Geopolitical events are once again driving the markets, with the US dollar under pressure. After a brief hiatus, North Korea is back in the news again, as the rogue country fired a missile over Japanese territory on Tuesday. Japan and the US have sharply condemned the missile launch, and with tensions once again climbing in the Korean peninsula, nervous investors have moved a way from stocks in favor of safe-haven assets such as gold. If the crisis continues, we can expect the gold rally to continue. Since Friday, gold prices have climbed 1.9 percent.

At the Jackson Hole meeting last week, Yellen did not discuss interest rate policy, choosing instead to emphasize that the financial regulations put in place since the financial crisis in 2008 should not be undermined. Her message appeared aim at Donald Trump, who has expressed his intention to relax banking and financial regulations which he has argued are hampering business. The markets remain skeptical about a third and final rate hike this year, as the odds of an increase in December have been falling – currently, the odds a December hike are at 35%, down from 42% a month ago.

North Korea Missile Shakes Markets

XAU/USD Fundamentals

Tuesday (August 29)

  • 9:00 US S&P/CS Composite-20 HPI. Estimate 5.6%. Actual 5.7%
  • 10:00 US CB Consumer Confidence. Estimate 120.9. Actual 122.9

Upcoming Key Events

Wednesday (August 30)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 186K
  • 8:30 US Preliminary GDP. Estimate 2.7%

*All release times are GMT

*Key events are in bold

XAU/USD for Tuesday, August 29, 2017

XAU/USD August 29 at 12:50 EST

Open: 1310.00 High: 1326.13 Low: 1300.00 Close: 1314.58

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1260 1285 1307 1337 1367 1392
  • XAU/USD posted gains in the Asian and European sessions. In North American trade, the pair has lost ground
  • 1307 is providing support
  • 1337 is the next resistance line
  • Current range: 1307 to 1337

Further levels in both directions:

  • Below: 1307, 1285, 1260 and 1232
  • Above: 1337, 1367 and 1392

OANDA’s Open Positions Ratio

In the Tuesday session, XAU/USD ratio is showing short positions with a majority (52%), indicative of slight trader bias towards XAU/USD reversing directions and moving lower.

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.