Gold Slightly Higher, Markets Keep Wary Eye on Tariff Tussle

Gold has posted slight gains in the Wednesday session. In North American trade, the spot price for an ounce of gold is $1335.21, up 0.19% on the day. In economic news, ADP Nonfarm Payrolls climbed in March to 241 thousand, crushing the forecast of 208 thousand. On the services front, ISM Non-manufacturing PMI dropped to 58.8, shy of the estimate of 58.8 points. On Thursday, the US releases unemployment claims.

Gold prices have headed higher this week as the tariff spat between China and the US has escalated, raising the specter of an all-out global trade war. The stock markets are seeing red, but gold, as a key safe-haven asset, stands to be a big winner from the current crisis, as nervous investors could snap up the base metal if there is no quick resolution to the current crisis. The Chinese government has fired the latest salvo, announcing 25% tariffs on 106 American products, including soybeans, wheat and some motor vehicles. The value of these US exports amounts to some $50 billion – the same value as Chinese exports which have been slapped with tariffs by President Trump. This represents a significant raising of the stakes, and has the markets worried. China’s deputy finance minister has said that a trade war between the two sides would be a ‘lose-lose’, and few investors would disagree with his diagnosis. However, neither Trump nor Chinese President Xi Jinping has blinked so far, and the crisis shows no signs of being resolved anytime soon. As one US analyst wrote this week, “trade wars are easy to start but hard to stop.”

US at War: China Retaliates to Trumps Tariffs

 

XAU/USD Fundamentals

 Wednesday (April 4)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 208K. Actual 241K
  • 9:45 US Final Services PMI. Estimate 54.3. Actual 54.0
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 59.0. Actual 58.8
  • 10:00 US Factory Orders. Estimate 1.7%. Actual 1.2%
  • 10:30 US Crude Oil Inventories. Estimate 1.4M. Actual -4.6M
  • 11:00 US FOMC Member Loretta Mester Speaks

 Thursday (April 5)

  • 8:30 US Unemployment Claims. Estimate 225K

*All release times are DST

*Key events are in bold

 

XAU/USD for Wednesday, April 4, 2018

XAU/USD April 4 at 12:30 EST

Open: 1332.76 High: 1348.27 Low: 1331.56 Close: 1335.21

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1260 1285 1307 1337 1375 1416
  • XAU/USD edged higher in the Asian session and posted strong gains in European trade. The pair has reversed directions and headed lower in North American trade
  • 1307 is providing support
  • 1337 is under pressure in resistance. It could break in the North American session
  • 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 Wednesday session, XAU/USD ratio is showing short positions with a slight majority (52%), 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

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.