Wobbly gold slips below $1250, U.S GDP disappoints

Gold has posted small gains in the Thursday session. In the North American session, the spot price for one ounce of gold is $1250.63, down 0.17% on the day. On the release front, U.S numbers were soft for a second straight day. U.S Final GDP in the first quarter slipped to 2.0%, missing the estimate of 2.2%. Unemployment claims jumped to 227 thousand, well above the estimate of 220 thousand. On Friday, the U.S will publish consumer spending and inflation data, as well as UoM Consumer Sentiment.

Gold prices continue to point lower, as the metal has posted losses in 9 of the last 10 daily sessions. During that time, gold has declined 4.0 percent. Earlier on Thursday, gold dropped to $1248, setting a record low in 2018. Traditionally, gold acts a safe-haven asset during times of trouble, but that hasn’t been the case in the escalating tariff battle between the U.S and China. Investors are increasingly worried that if the tariff battles continue, growth will slow in both the U.S and China, and the result could be a global recession. If the Trump administration makes good on its threat to impose additional tariffs on the China and the European Union, gold prices could continue to spiral downwards.

U.S economic numbers have looked soft for a second straight day. On Thursday, Final GDP dipped to 2.0%, weaker than the second estimate of GDP in May, which showed growth of 2.0%. Much of the slowdown is being attributed to weaker consumer spending in the first quarter. There are expectations of banner growth in the second quarter, with some analysts predicting growth of over 5 percent, as the massive January tax cut should boost economic growth. However, the escalating trade war between the U.S and its trading partners, especially China, could dampen second quarter GDP. Trade tensions show no sign of easing, with President Trump threatening tariffs on some $250 billion in Chinese goods. On Wednesday, U.S durable goods reports in May were a disappointment. Core durable goods orders declined 0.3%, well of the estimate of 0.5% and a 4-month low. Durable goods orders declined for a second straight month, with a reading of -0.6%. Still, this was better than the forecast of -0.9%.

  Confusion reigns supreme

  Markets remain under pressure on trade concerns

  Dollar rises to new heights against G10 and EM pairs

XAU/USD Fundamentals

Thursday (June 28)

  • 8:30 US Final GDP. Estimate 2.2%. Estimate 2.0%
  • 8:30 US Unemployment Claims. Estimate 220K. Actual 227K
  • 8:30 US Final GDP Price Index. Estimate 1.9%. Actual 2.2%
  • 10:30 US Natural Gas Storage. Estimate 73B. Actual 66B
  • 12:00 US FOMC Member Bostic Speaks

Friday (June 29)

  • 8:30 US Core PCE Price Index. Estimate 0.2%
  • 8:30 US Core Personal Spending. Estimate 0.4%
  • 10:00 US Revised UoM Consumer Sentiment. Estimate 99.1

*All release times are DST

*Key events are in bold

XAU/USD for Thursday, June 28, 2018

XAU/USD June 28 at 12:20 DST

Open: 1252.37 High: 1254.32 Low: 1248.50 Close: 1250.19

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1204 1220 1236 1260 1285 1307

XAU/USD was flat in the Asian session. In European trade, the pair edged lower but then recovered. The pair has posted small losses in North American trade

  • 1236 is providing support
  • 1260 was tested earlier in resistance. It is a weak line
  • Current range: 1236 to 1260

Further levels in both directions:

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

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.