Gold starts week with losses as tariff spat continues

Gold is has posted slight losses in the Monday session. In North American trade, the spot price for one ounce of gold is $1266.80 down 0.26% on the day. It’s a quiet start to the week, with only one event. New Home Sales New Home Sales jumped to 689 thousand, well above the estimate of 665 thousand. On Tuesday, the U.K publishes CBI Realized Sales and the U.S will release CB Consumer Confidence.

The escalating trade war between the U.S and China has spooked investors and sent global equity markets sharply lower. Although gold, a safe-haven asset, usually benefits from geopolitical crises, that has not proven the case this time around. Instead, 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. On Thursday, gold dropped to $1261, as it recorded a new low for 2018.

With little in the way of fundamental releases early in the week, the markets are keeping a wary eye on the escalating trade dispute between the U.S. and its major trading partners. The heads of central banks have expressed alarm, and last week, Jerome Powell and Mario Draghi sounded gloomy about the repercussions that a trade war could have on economic growth and monetary policy. On Sunday, the Bank of International Settlements (BIS), which acts as an umbrella group for some 60 central banks also weighed in. The head of the BIS, Augustin Carstens, warned that recent protectionist moves could hamper global growth and financial stability, and could have negative side effects on the currency markets. At the same time, the BIS expressed support for the Federal Reserve raising interest rates gradually and for the ECB heading towards normalization as it winds up its massive asset program.

  China’s liquidity boost tempered by trade war jousting

  Trade continues to weigh at the start of the week

XAU/USD Fundamentals

Monday (June 25)

  • 10:00 US New Home Sales. Estimate 665K. Actual 689K

Tuesday (June 26)

  • 10:00 US CB Consumer Confidence. Estimate 127.6

*All release times are DST

*Key events are in bold

XAU/USD for Monday, June 25, 2018

XAU/USD June 25 at 12:40 DST

Open: 1269.96 High: 1272.63 Low: 1264.53 Close: 1266.11

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1220 1236 1260 1285 1307 1322

XAU/USD edged lower in the Asian session. The pair has shown limited  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.