Gold steadies as trade tensions ease

Gold is almost unchanged in the Thursday session, following four consecutive days of losses. In North American trade, the spot price for one ounce of gold is $1268.14, down 0.01% on the day. On the release front, major U.S indicators were a mixed bag. The Philly Fed Manufacturing Index slid to 19.9 points, its lowest level since August. There was better news on the employment front, as unemployment claims remained unchanged at 218 thousand, beating the estimate of 220 thousand. On Friday, OPEC members meet in Vienna.

It’s been a rough ride for gold prices, which are down 2.7% since Friday. This is somewhat surprising since the escalating trade war between the U.S and China has unnerved investors and sent global equity markets sharply lower. Gold often benefits from geopolitical crises, as investors tend to snap up safe-haven assets such as the base metal. However, this latest round of trade battle rhetoric has boosted the U.S. dollar, which continues to gain ground against a basket of currencies. In essence, investors and traders have been betting on the greenback rather than on gold. Earlier on Thursday, gold dropped to $1261, as it recorded a new low for 2018.

Central bankers converged in Sintra, Portugal this week, and the trade war between the U.S and its trading partners was high on the agenda. The heads of the central banks from the U.S, Japan and the European Union were united in the gloomy view of the trade conflict, with Federal Reserve Chair Jerome Powell saying that the changes is trade policy could force the Fed to “question its outlook”. ECB President Mario Draghi said that the trade spat could have negative consequences on monetary policy. If these protectionist measures force central banks to alter their monetary policy, this could have a significant impact on gold prices, which are sensitive to moves in interest rates.

  (Update 1) Onwards and Upwards

  Oil falls -2% as OPEC nears deal to raise production

 

XAU/USD Fundamentals

  • 8:30 US Philly Fed Manufacturing Index. Estimate 28.3. Actual 19.9
  • 8:30 US Unemployment Claims. Estimate 220K. Actual 218K
  • 9:00 US HPI. Estimate 0.3%. Actual 0.1%
  • 10:00 US CB Leading Index. Estimate 0.4%. Actual 0.2%
  • 10:30 US Natural Gas Storage. Estimate 85B. Actual 91B
  • Tentative – US Bank Stress Test Results

Friday (June 22)

  • All Day – OPEC Meetings

*All release times are DST

*Key events are in bold

 

XAU/USD for Thursday, June 21, 2018

XAU/USD June 21 at 12:30 DST

Open: 1268.13 High: 1270.15 Low: 1261.47 Close: 1268.14

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1220 1236 1260 1285 1307 13322

XAU/USD showed little movement in the Asian session. In European trade, the pair edged lower but then recovered. XAU/USD has ticked lower North American trade

  • 1260 is providing support
  • 1285 is the next resistance line
  • Current range: 1260 to 1285

Further levels in both directions:

  • Below: 1260, 1236, 1220 and 1204
  • Above: 1285, 1307, 1322 and 1337

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.