Gold Slumps as Treasury Bills Hit 3 Percent

Gold has recorded sharp losses in the Monday session. In the North American session, the spot price for an ounce of gold is $1323.67, down 0.93% on the day. In economic news, Existing Home Sales improved to 5.60 million, above the estimate of 5.55 million. This marked a 4-month high. On Tuesday, the key event is CB Consumer Confidence.

What’s good for the greenback is often bad news for gold, and this has been the case on Monday. The US dollar has posted road gains to start the week, courtesy of US Treasury bills, which pushed above the 3-percent threshold for the first time since January 2014. With treasury spreads widening over European and Japanese yields, investors have propped up the greenback, and gold prices have slipped to their lowest level in 2 weeks.

The stock markets have been rocked by volatility in recent weeks, in response to tariffs which the US and China have imposed on the other. US President Trump has threatened to slap tariffs on up to $150 billion on Chinese goods, and China has promised to respond with heavy tariffs on US imports. The escalating crisis has raised fears that a trade war between the two economic giants could slow down Chinese growth and trigger a global recession. However, US Treasury Secretary Steven Mnuchin sought to lower the rhetoric on the weekend, saying that he was considering a trip to China, adding he was “cautiously optimistic” that the two sides could resolve the trade dispute. If the US and China can patch up their differences, the safe-haven Japanese currency could continue to lose ground.

U.S Dollar Responds to Higher Yields

XAU/USD Fundamentals

 Monday (April 23)

  • 9:45 US Flash Manufacturing PMI. Estimate 55.2. Actual 56.6
  • 9:45 US Flash Services PMI. Estimate 54.3. Actual 54.4
  • 10:00 US Existing Home Sales. Estimate 5.55M. Actual 5.60M

 Tuesday (April 24)

  • 10:00 US CB Consumer Confidence.  Estimate 126.0
  • 10:00 US New Home Sales. Estimate 625K

*All release times are DST

*Key events are in bold

XAU/USD for Monday, April 23, 2018

XAU/USD April 23 at 12:55 DST

Open: 1336.15 High: 1336.15 Low: 1322.30 Close: 1323.79

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1260 1285 1307 1337 1375 1416
  • XAU/USD edged lower in the Asian session. The pair reversed directions and posted gains in European trade. The pair is showing limited movement in North American session
  • 1307 is providing support
  • 1337 is the next resistance line
  • 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

XAU/USD ratio is showing small gains towards long positions. Currently, short and long positions are evenly split, indicative of a lack of trader bias towards XAU/USD.

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.