XAU/USD – Gold Rally Continues on Tariff Jitters

Gold has posted considerable gains in the Monday session, after recording sharp gains on Friday. In North American trade, the spot price for an ounce of gold is $1355.40 up 0.55% on the day. There are no data releases on the schedule. The markets will be listening closely to speeches from three FOMC members – William Dudley, Loretta Mester and Randal Quarles. On Tuesday, the key events is CB Consumer Confidence.

US durable goods reports ended the week on a high note, but the dollar still lost ground on Friday. Core Durable Goods Orders rebounded with a strong gain of 1.2%, crushing the estimate of 0.5%. This marked the strongest gain since July 2016. Durable Goods Orders jumped to an 8-month high, with a gain of 3.1%. The reading easily beat the forecast of 1.6%. The US manufacturing sector continues to expand at an impressive clip, a result of stronger global growth and a cheaper US dollar, which makes US goods less expensive for foreign buyers.

Are we headed for a global trade war? There are some worrying signs, as US President Trump slapped 25% tariffs on up to $60 billion worth of Chinese imports on Thursday. Trump said that the tariffs are needed to address the massive trade deficit with China, which stands at $375 billion. For its part, China wasted no time in threatening to retaliate, saying it was planning to impose tariffs on 128 US products, which would amount to $3 billion in imports. The tariffs directed against China come on the heels of tariffs on steel imports coming into the US, although the US has promised exemptions to the EU and other trading partners. There is serious concern that these moves could ignite a global trade war, and if the US tariffs remain in place, as downturn in the Chinese economy could spread and possibly a global recession.

XAU/USD Fundamentals

Monday (March 26)

  • 12:30 US FOMC Member William Dudley Speaks
  • 16:30 US FOMC Member Loretta Mester Speaks
  • 19:10 US FOMC Member Randal Quarles Speaks

 Tuesday (March 27)

  • 9:00 US S&P/CS Composite-20 HPI. Estimate 6.1%
  • 10:00 US Consumer Confidence. Estimate 131.2
  • 10:00 US Richmond Manufacturing Index. Estimate 23
  • 11:00 US FOMC Raphael Bostic Speaks

*All release times are DST

*Key events are in bold

XAU/USD for Monday, March 26, 2018

XAU/USD March 26 at 12:35 EST

Open: 1348.00 High: 1355.95 Low: 1343.55 Close: 1355.40

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1285 1307 1337 1375 1416 1433
  • 1337 is providing support
  • 1375 is the next resistance line
  • 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 a slight majority for short positions (52%). This is indicative of slight trader bias towards XAU/USD reversing directions and moving to lower 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

Market Analyst at OANDA
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.