Gold dips to six-month low, US economic numbers mixed

Gold has posted losses in the Tuesday session. In North American trade, the spot price for one ounce of gold is $1266.59 down 0.39% on the day. On the release front, the Richmond Manufacturing Index improved to 20 points, above the estimate of 15 points. This marked a 3-month high. As well, CB Consumer Confidence dropped to 126.4, shy of the estimate of 127.6 points. On Wednesday, the focus will be on durable goods orders.

There is widespread concern among central bankers that recent protectionist moves could hamper global growth and financial stability. This was the message on Sunday from the Bank of International Settlements (BIS), which acts as an umbrella group for some 60 central banks. The BIS also warned that the escalating trade war 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.

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, such has not been 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.

  US Treasury Secretary Warns of Forthcoming Announcement on Investment Restrictions

  Trade spats continue to weigh

XAU/USD Fundamentals

Tuesday (June 26)

  • 9:00 US S&P/CS Composite-20 HPI. Estimate 6.9%. Actual 6.6%
  • 9:59 US Richmond Manufacturing Index. Estimate 15. Actual 20
  • 10:00 US CB Consumer Confidence. Estimate 127.6. Actual 126.4 
  • 13:00 US FOMC Member Rafael Bostic Speaks

Wednesday (June 27)

  • 8:30 US Core Durable Goods Orders. Estimate 0.5%
  • 8:30 US Durable Goods Orders. Estimate -0.9%

*All release times are DST

*Key events are in bold

XAU/USD for Tuesday, June 26, 2018

XAU/USD June 26 at 12:20 DST

Open: 1265.62 High: 1267.80 Low: 1254.85 Close: 1260.87

XAU/USD Technical

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

XAU/USD edged lower in the Asian session and recorded stronger losses in European trade. The pair has recovered some of these losses in North American trade

  • 1260 is under strong pressure in resistance. It was tested earlier and could break during the North American session
  • 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.