Gold Pressuring Dollar Ahead of Manufacturing PMI

Gold is steady on Tuesday, as the spot price stands at $1326.49 per ounce in the European session. The metal climbed to $1332.59 earlier in the day, its highest level in 13 weeks. On the release front, today’s highlight is ISM Manufacturing PMI, with the markets expecting a strong reading in June.

In the US, the week started out in impressive style, as Pending Home Sales jumped 6.1%, crushing the estimate of 1.4%. This was the strongest gain since May 2013. US housing numbers were excellent last month, as New Home Sales and Existing Home Sales both beat their estimates. The dollar managed to weather a dismal GDP in Q1, so strong numbers this week could give a nice boost to the currency.

Last Friday, Ukraine signed an association agreement with the EU, which strengthens economic and political ties between Ukraine and the EU. Earlier in the year, the decision by the Ukrainian president not to sign the deal led to widespread demonstrations and the installation of a new government in Kiev. Predictably, Russia is upset about the trade deal and has warned about consequences if its economic interests are harmed as a result of the agreement. The situation remains tense in eastern Ukraine, and a flare-up in violence could rattle the markets and affect gold, which tends to gain ground on geopolitical instability.

XAU/USD for Tuesday, July 1, 2014

XAU/USD July 1 at 10:40 GMT

XAU/USD 1326.49 H: 1332.59 L: 1323.78

XAU/USD Technical

• Gold has been steady in the Asian and European sessions. The pair touched a high of 1332.59 in the Asian session but was unable to consolidate at this level.
• 1315 is providing support.
• 1331 is the next resistance line. 1354 is stronger.
• Current range: 1315 to 1331.

Further levels in both directions:

• Below: 1315, 1300, 1275 and 1260
• Above: 1331, 1354, 1375 and 1388

OANDA’s Open Positions Ratio

XAU/USD continues to point to gains in short positions on Tuesday, continuing the trend we saw a day earlier. This is reflected in the pair’s movement, as gold has posted very small losses. The ratio is split evenly between long and short positions, pointing to a lack of bias as to which direction the pair will take.

XAU/USD Fundamentals

• 12:00 Treasury Secretary Jack Lewis Speaks.
• 13:45 US Final Manufacturing PMI. Estimate 57.5 points.
• 14:00 US ISM Manufacturing PMI. Estimate 55.6 points.
• 14:00 US Construction Spending. Estimate 0.5%.
• 14:00 US IBD/TIPP Economic Optimism. Estimate 48.9 points.
• 14:00 US ISM Manufacturing Prices. Estimate 60.0 points.
• All Day – US Total Vehicle Sales. Estimate 16.5M.

*Key releases are highlighted in bold

*All release times are GMT

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