Gold Jumps as China Plays Tit-for-Tat with Trump

Gold has posted strong gains in the Monday session. In North American trade, the spot price for an ounce of gold is $1336.94, up 0.89% on the day. In economic news, ISM Manufacturing PMI dropped to 59.3, short of the estimate of 60.1 points.

US indicators ended the week on a mixed note. Unemployment claims impressed, dropping to 215 thousand. This easily beat the estimate of 230 thousand. Consumer confidence also improved, as UoM Consumer Sentiment rose to 101.4, breaking past the 100-barrier for the first time since October. However, the indicator missed the estimate of 101.9 points.

The tariff battles continue, with China firing the latest shot. On Monday, China responded to recent US tariffs, imposing its own duties on a range of US goods, including frozen pork and wines. This move is bound to escalate tensions between the two economic giants, and has raised fears that a new global trade war could be underway. If the tit-for-tat measures continue, both the US and Chinese economies could suffer, which could lead to a global slowdown. Gold is sensitive to geopolitical crisis, as investors tend to snap up safe-haven assets such as gold during times of uncertainty. If tensions worsen between China and the US, gold prices could continue to move upwards.

China and U.S Tit-for-Tat Tariffs Start

XAU/USD Fundamentals

 Monday (April 2)

  • 9:45 US Final Manufacturing PMI. Estimate 55.7. Actual 55.6
  • 10:00 US ISM Manufacturing PMI. Estimate 60.1. Actual 59.3
  • 10:00 US Construction Spending. Estimate 0.4%. Actual 0.1%
  • 10:00 US ISM Manufacturing Prices. Estimate 72.5. Actual 78.1

*All release times are DST

*Key events are in bold

XAU/USD for Monday, April 2, 2018

XAU/USD April 2 at 11:30 EST

Open: 1325.24 High: 1338.18 Low: 1324.85 Close: 1336.94

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1260 1285 1307 1337 1375 1416
  • XAU/USD has posted gains throughout the Monday session
  • 1307 is providing support
  • 1337 is under pressure in resistance
  • Current range: 1307 to 1337

Further levels in both directions:

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

OANDA’s Open Positions Ratio

In the Monday session, XAU/USD ratio is showing long positions with a majority (60%), indicative of 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

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.