Gold slide resumes as jobless claims slide

Gold has resumed its losing ways in the Thursday session, after showing little change on Wednesday. In North American trade, the spot price for one ounce of gold is $1217.53, down 0.83% on the day. On the release front, manufacturing and employment data were better than expected. The Philly Fed Manufacturing Index climbed to 25.7, easily beating the estimate of 21.6 points. Unemployment claims dropped to 207 thousand, better than the estimate of 220 thousand.

The escalating trade war between the U.S and its major trading partners, which could hurt the U.S economy, is fast becoming a major concern for the Federal Reserve. The Fed’s Beige Book in July, which was released on Wednesday, had over 30 references to “tariffs”. Most of the twelve Fed regional districts referred to tariffs in their individual reports, which make up the Beige Book. Some Fed policymakers have also voiced their concern over the impact that tariffs could have on the U.S economy and is an issue the Fed will have to take into consideration, as it mulls over rate policy for the next six months.

With the U.S economy in excellent shape, Jerome Powell didn’t have to look far to reaffirm his positive outlook on the U.S economy in testimony before the Senate Banking Committee earlier this week. Powell said that he expected the labor market to remain tight and inflation to stay close to the Fed’s target of 2 percent for the next several years. Powell added that the Fed would continue to gradually raise interest rates. Lawmakers appeared satisfied with current monetary policy, but Powell did face some pointed questions regarding the escalating trade war, which has raised concerns that the economy could take a downturn if the tariff battles continue. The Fed continues to project two more rate hikes in the second half of 2018, most likely in September and December. According to the CME Group, the likelihood of a quarter-point rate hike in September is 84 percent.

  ‘Footy’ dented U.K retail sales and pounds sterling

XAU/USD Fundamentals

Thursday (July 19)

  • 8:30 US Philly Fed Manufacturing Index. Estimate 21.6. Actual 25.7
  • 8:30 US Unemployment Claims. Estimate 220K. Actual 207K
  • 9:00 US FOMC Member Randal Quarles Speaks
  • 10:00 US CB Leading Index. Estimate 0.4%
  • 10:30 US Natural Gas Storage. Estimate 58B

Friday (July 20)

  • Tentative – OEPC-JMMC Meetings

*All release times are DST

*Key events are in bold

XAU/USD for Thursday, July 19, 2018

XAU/USD July 19 at 11:25 DST

Open: 1227.54 High: 1228.58 Low: 1211.60 Close: 1217.37

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1146 1170 1204 1220 1236 1260

XAU/USD posted small losses in the Asian session. The pair was down sharply in European trade but has reversed directions in North American trade and has edged higher

  • 1204 is providing support
  • 1220 has switched to a resistance role as XAU/USD has posted losses on Thursday. It is a weak line
  • Current range: 1204 to 1220

Further levels in both directions:

  • Below: 1204 and 1170 and 1146
  • Above: 1220, 1236, 1260 and 1285

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.