Gold Pauses After Plunge, Consumer Confidence Ahead

Gold has edged higher in the Friday session, after sharp losses in Thursday trade. In the North American session, the spot price for an ounce of gold is $1338.02, up 0.22% on the day. In economic news, the US releases UoM Consumer Sentiment, which is expected to soften to 100.6 points. On the employment front, JOLTS Jobs Openings is expected to fall to 6.11 million.

It’s been a roller-coaster ride for gold over the past two days. Gold prices slumped 1.3% on Thursday, after gains of 1.0% on Wednesday. The volatility is closely connected to escalating tensions in the Middle East. The US has threatened to attack Syria for an alleged chemical attack on the weekend, but Russia has promised it will shoot down any US missiles aimed at Syria. President Trump had vowed that a strike was imminent, but has since backtracked, to the relief of the markets. Still, Trump is unpredictable, and if the US carries out a military strike, panicky investors could snap up safe-haven gold. Meanwhile, a fact-finding team from the Organization for the Prohibition of Chemical Weapons has arrived in Syria to attempt to verify if a chemical attack did indeed take place.

The Federal Reserve minutes had a generally hawkish tone, reflective of a solid US economy. All of the Fed policymakers indicated that the US economy would continue to improve and that inflation would rise in the next few months. At the March meeting, the Fed unanimously voted to raise rates by a quarter-point, bringing the benchmark rate to a range between 1.50% and 1.75%. The Fed projection for rate policy in 2018 remains at three hikes, although there is speculation that the Fed could revise the forecast to four rate hikes. Last week, Fed Chair Jerome Powell said that the Fed would likely continue to raise rates in order to keep a lid on inflation, but added that the rate moves would be gradual. A new headache for the Fed is the escalating trade battle between the US and China, which could hurt the economy and raise consumer prices. As for the next two rate meetings, the markets expect Powell & Co. to sit tight in May and raise rates at the June meeting.

 

XAU/USD Fundamentals

 Friday (April 13)

  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 100.6
  • 10:00 US JOLTS Jobs Openings. Estimate 6.11M
  • 10:00 US Preliminary UoM Inflation Expectations 

*All release times are DST

*Key events are in bold

 

XAU/USD for Friday, April 13, 2018

XAU/USD April 13 at 8:25 DST

Open: 1335.10 High: 1342.00 Low: 1333.48 Close: 1338.02

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1285 1307 1337 1375 1416 1443
  • XAU/USD posted gains in the Asian session and has given up some of these gains
  • 1337 is under strong pressure in 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

XAU/USD ratio is showing little movement in the Friday session. Currently, short positions have a majority (53%), indicative of trader bias towards XAU/USD reversing directions and heading lower.

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.