Gold Slips as US Dollar Selloff Hits the Brakes

Gold has started the week with losses. In Monday’s North American trade, the spot price for an ounce of gold is $1341.32, down 0.62% on the day. On the release front, Personal Spending slowed to 0.4%, shy of the estimate of 0.6%. On Tuesday, the key indicator is CB Consumer Confidence and President Trump will deliver the State of the Union address.

January has been good to gold, with the metal climbing 2.8% during this period. Gold prices touched $1366 last week, its highest level since August 2017. The US dollar selloff was in full flight on Wednesday, as the dollar tumbled against gold and major currencies following comments from US Treasury Secretary Steven Mnuchin. Speaking in Davos, Mnuchin said that the US was comfortable with a low dollar. This drew a rebuke from ECB President Mario Draghi, who accused the US of targeting the exchange rate. Mnuchin sheepishly backtracked, claiming his remarks had been taken out of context and that he was in favor of a stronger dollar.

In the US, recent GDP releases have pointed to strong growth of 3% or higher. This resulted in some disappointment on Friday, as Advance GDP came in at 2.6%, short of the estimate of 3.0%. The economy grew 2.3% in 2017, compared to 1.6% in 2016. Growth in Q4 was affected by stronger consumer spending, which led to a surge in imports. At the same time, the increase in consumer spending also boosted inflation, as the personal consumption expenditures index, which the Fed prefers to use, rose 1.9% in the fourth quarter, up from 1.3% in Q3. A strong US economy has boosted the manufacturing sector, as durable goods orders in December hit 2.9%, crushing the estimate of 0.6%. This was the highest gain in six months, and helped make 2017 a banner year. Durable good orders increased 5.8% in 2017, the sharpest expansion since 2011.

 

XAU/USD Fundamentals

Monday (January 29)

  • 8:30 US Core PCE Price Index. Estimate 0.2%. Actual 0.2%
  • 8:30 US Personal Spending. Estimate 0.5%. Actual 0.4%
  • 8:30 US Personal Income. Estimate 0.3%. Actual 0.4%

Tuesday (January 30)

  • 10:00 US CB Consumer Confidence. Estimate 123.2
  • 21:00 President Trump Speaks

*All release times are GMT

*Key events are in bold

 

XAU/USD for Monday, January 29, 2018

XAU/USD January 29 at 12:50 EST

Open: 1349.77 High: 1352.50 Low: 1337.65 Close: 1341.32

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1285 1307 1337 1375 1416 1433
  • XAU/USD was flat in the Asian session. XAU/USD posted slight losses in European trade and continues to move lower  in the North American session
  • 1337 was tested earlier in support and is weak line
  • 1375 is the next line of resistance
  • Current range: 1337 to 1375

Further levels in both directions:

  • Below: 1337, 1307, 1285 and 1260
  • Above: 1375, 1416 and 1433

OANDA’s Open Positions Ratio

In the Monday session, XAU/USD ratio is showing short positions with a majority (55%). This is indicative of trader bias towards XAU/USD continuing to lose ground.

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.