Gold dips as retail sales climb

Gold has posted slight losses in the Monday session. In North American trade, the spot price for one ounce of gold is $1239.15, down 0.20% on the day. On the release front, U.S core retail sales dropped to 0.4%, matching the estimate. Retail sales dropped to 0.5%, edging above the estimate of 0.4%. On Tuesday, Federal Reserve Chair Jerome Powell testifies before the Senate Banking Committee.

The trade war between the U.S and China is raising concerns not just on the equity markets but at the Federal Reserve as well. On Friday, Dallas Fed President Robert Kaplan said he would have to downgrade his economic outlook for the economy if the tariff battle continues. Kaplan said that U.S tariffs on steel and aluminum imports had dampened capital expenditures plans and further trade tensions could lead to currency fluctuations and geopolitical instability.

The booming U.S economy received a vote of confidence last week from the head of the Federal Reserve. On Thursday, Fed Chair Jerome Powell said that the economy is “in a really good place”, pointing to President Trump’s massive tax cut scheme and increased spending as key factors in boosting economic growth. Powell did not address monetary policy and said he was uncertain as to the effects of the current trade disputes which has embroiled the U.S and its trading partners. The Fed will likely press the rate trigger in the second half of the year, but it is an open question as to whether we’ll see one hike over the next six months. The Fed is projecting growth of 2.8% in 2018, compared to 2.3% in 2017.

  Trade ,earnings ,teapots and the US dollar

China Q2 GDP growth as expected, though lower than Q1

XAU/USD Fundamentals

Monday (July 16)

  • 8:30 US Core Retail Sales. Estimate 0.4%. Actual 0.4%
  • 8:30 US Retail Sales. Estimate 0.4%. Actual 0.4%. Actual 0.5%
  • 8:30 US Empire State Manufacturing Index. Estimate 20.3. Actual 22.6
  • 10:00 US Business Inventories. Estimate 0.4%

Tuesday (July 17)

  • 9:15 US Capacity Utilization Rate. Estimate 78.4%
  • 9:15 US Industrial Production. Estimate 0.5%
  • 10:00 US Federal Reserve Jerome Powell Testifies
  • 10:00 US NAHB Housing Market Index. Estimate 69
  • 16:00 US TIC Long-Term Purchases. Estimate 34.3B

*All release times are DST

*Key events are in bold

XAU/USD for Monday, July 16, 2018

XAU/USD July 16 at 11:25 DST

Open: 1241.68 High: 1245.61 Low: 1239.68 Close: 1239.15

XAU/USD Technical

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

XAU/USD edged lower in the Asian session. The pair showed little movement in European trade and has posted losses in North American trade

  • 1236 is providing support
  • 1260 is the next resistance 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.