Gold edges lower, investors eye GDP

Gold has posted small losses in the Tuesday session. In the North American session, the spot price for one ounce of gold is $1208.36, down 0.20% on the day. On the release front, there was positive news from manufacturing and consumer confidence data. CB Consumer Confidence jumped to 133.4, crushing the estimate of 126.6 points. On Wednesday, the U.S publishes Preliminary GDP for the second quarter and Pending Home Sales.

It has been a rough road for gold, which has shed 8.7% of its value since April 1. Months of escalating trade tensions and tit-for-tat tariffs between the U.S and China rocked risk appetite, as the U.S dollar has made strong gains at the expense of other major currencies. Even though gold is a safe-haven asset, it failed to benefit from nervous investors, who flocked to the U.S dollar. A booming U.S economy has also contributed to a strong greenback and weighted on gold prices. Traders should keep a close eye on U.S Preliminary GDP for Q2, which is expected to post a gain of 4.0%. If GDP misses this estimate, investors could get cold feet and boost gold prices.

Gold ended the week on a high note, posting gains of 1.7% on Friday. The gains were in response to comments from Federal Reserve Chair Jerome Powell, who spoke at the Jackson Hole Economic Symposium on Friday. Powell reiterated that the Fed would continue its policy of gradual interest rate hikes, and this pledge not to change policy sent the dollar lower and boosted gold prices. Powell argued that current monetary policy is prudent, but the Fed continues to face criticism on both ends. Some analysts have argued that the Fed has been too aggressive, given weak inflation, while others say the Fed should tighten more quickly, due to the extremely tight labor market. Powell appeared to take a middle approach of raising rates, but slowly. The Fed has already raised rates twice this year, and a September hike is practically a given, with the CME Group estimating the odds of a hike at 96%. The odds of a December hike currently stand at 66%.

 

XAU/USD Fundamentals

Tuesday (August 28)

  • 8:30 US Goods Trade Balance. Estimate -68.6B. Actual -72.2B
  • 8:30 Preliminary Wholesale Inventories. Estimate 0.1%. Actual 0.7%
  • 9:00 US S&P/CS Composite-20 HPI. Estimate 6.4%. Actual 6.3%
  • 10:00 US CB Consumer Confidence. Estimate 126.6. Actual 133.4
  • 10:00 US Richmond Manufacturing Index. Estimate 18. Actual 24

Wednesday (August 29)

  • 8:30 US Preliminary GDP. Estimate 4.0%
  • 10:00 US Pending Home Sales. Estimate 0.6%

*All release times are DST

*Key events are in bold

 

XAU/USD for Tuesday, August 28, 2018

XAU/USD August 28 at 11:30 DST

Open: 1211.29 High: 1214.41 Low: 1207.04 Close: 1208.36

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1146 1170 1204 1220 1236 1261

XAU/USD posted small losses in the Asian session. The pair reversed directions in European trade and recorded gains. XAU/USD has edged lower in North American trade

  • 1204 is providing support
  • 1220 is the next resistance line
  • Current range: 1204 to 1220

Further levels in both directions:

  • Below: 1204, 1170, 1146 and 1115
  • Above: 1220, 1236 and 1261

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.