- MarketPulse - https://www.marketpulse.com -

XAU/USD – Gold Pauses After Strong Gains to End Week

Gold is almost unchanged at the start of the week. In Monday’s North American session, spot gold is trading at $1256.01, up 0.07% on the day. On the release front, Existing Home Sales dropped to 5.52 million, missing the estimate of 5.59 million. On Tuesday, the US releases CB Consumer Confidence.

Gold continues to impress, gaining 1.7% last week. The metal is currently trading at its highest level since mid-June, as political turmoil in Washington has led to investors snapping up gold, a traditional safe-haven asset. Investors are increasingly concerned over Donald Trump, whose brash behavior and unconventional style has not been a good fit for the highest office in the land.  Trump had another bad week, as his flagship healthcare bill, which aims to replace Obamacare, stalled in the Senate after two Republican senators said they would not support the bill. Trump has failed to pass any significant legislation so far in his term, and investors are becoming more skeptical as to whether Trump will have any more success with his tax reform and fiscal spending plans. With the Democrats forming a rock-solid wall of opposition, dissension among Republican lawmakers, many of whom are uneasy about Trump, could doom attempts by the White House to get bills through Congress. There was more bad news as Robert Mueller, the special counsel who is investigating alleged collusion between Trump and Russian officials during the US election, said he would review business transactions involving Trump as well as his associates. Trump has said that Mueller’s scope is limited to Russia, so the stage could be set for a Nixon-type showdown between the president and the special counsel investigating wrongdoing by the president.

Aside from growing political risk in the US, gold prices rose last week after the European and Japanese central banks announced that they would continue their accommodative monetary policy. As well, the ECB and BoJ maintained the current policy of ultra-low interest rates, at 0.00% and 0.10% respectively. With the economies in the eurozone and Japan both showing improvement, there has been pressure on policymakers to reduce stimulus. However, inflation levels in the eurozone and Japan are well below the target of 2%, and the banks have reiterated that they will not taper asset-purchases until inflation levels move higher. The ECB is expected to revisit its monetary stance at its September meeting, and if policymakers decide to tighten monetary policy, gold prices could head lower.

IMF Sees U.S. Fading as Global Growth Engine [1]

USD/XAU Fundamentals

Monday (July 24)

Tuesday (July 25)

*All release times are EDT

*Key events are in bold

XAU/USD for Monday, July 24, 2017

XAU/USD July 24 at 12:15 EST

Open: 1244.99 High: 1258.86 Low: 1252.01 Close: 1256.01

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1170 1199 1232 1260 1285 1307

Further levels in both directions:

OANDA’s Open Positions Ratio

XAU/USD ratio showed gains in short positions, following strong gains by XAU/USD on Friday. Currently, long positions have a majority (68%), indicative of 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 [5]

Market Analyst at OANDA [6]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

Latest posts by Kenny Fisher (see all [5])