Gold gains ground despite strong Preliminary GDP

Gold has posted slight gains in the Wednesday session. In the North American trade, the spot price for one ounce of gold is $1204.39, up 0.26% on the day. On the release front, Preliminary GDP jumped 4.2%, beating the estimate of 4.1%. Pending Home Sales disappointed with a reading of -0.7%, well off the estimate of 0.3%. On Thursday, the U.S publishes personal spending and unemployment claims.

It’s full speed ahead for the U.S economy, which posted excellent growth in the second quarter. Preliminary GDP for Q2 was revised upwards to 4.2%, edging above the estimate of 4.0%. This reading was above the initial GDP release of 4.1% back in July. Growth in the second quarter was much stronger than in Q1, which posted a gain of 2.2%. Will the strong data continue in the third quarter? Consumer spending has been strong early in the quarter, but housing data has disappointed, with recent key indicators missing expectations. Although the GDP release beat the estimate, investors the US dollar failed to gain ground, and gold has held its own on Wednesday.

It has been a rough road for gold, which has shed 8.6% 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 weighed on gold prices.

 

XAU/USD Fundamentals

Wednesday (August 29)

  • 8:30 US Preliminary GDP. Estimate 4.0%. Actual 4.2%
  • 8:30 US Preliminary GDP Price Index. Estimate 3.0%. Actual 3.0%
  • 10:00 US Pending Home Sales. Estimate 0.3%. Actual -0.7%
  • 10:30 US Crude Oil Inventories. Estimate -0.7M. Actual -2.6M

Thursday (August 30)

  • 4:30 British Net Lending to Individuals. Estimate 5.5B
  • 8:30 US Personal Spending. Estimate 0.4%
  • 8:30 US Unemployment Claims. Estimate 214K

*All release times are DST

*Key events are in bold

 

XAU/USD for Wednesday, August 29, 2018

XAU/USD August 29 at 11:45 DST

Open: 1201.45 High: 1206.82 Low: 1200.89 Close: 1204.39

 

XAU/USD Technical

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

XAU/USD edged higher in the Asian session but gave up these gains in European trade. The pair has posted slight gains in North American trade

  • 1204 is fluid. Currently, it is a weak support line
  • 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.