XAU/USD – Gold slips as dollar flexes muscle

Gold has headed lower in the Monday session. In North American trade, the spot price for one ounce of gold is $1221.35, down 0.42% on the day. It’s a quiet start to the week, with no U.S releases on the schedule. On Tuesday, the U.S releases Richmond Manufacturing Index.

Relations between the U.S and China remain strained, as the trade war continues to simmer between the world’s two largest economies. On Thursday, the U.S Treasury Department released its semi-annual report on foreign exchange rates, and there was some relief in the markets as the report did not name China as a currency manipulator. Still, the report said that the U.S was “deeply disappointed’ with that China refuses to disclose the extent of its foreign currency intervention. The Chinese yuan has slipped some 9 percent since April, and U.S officials are concerned that China has deliberately weakened the currency in order to counter U.S tariffs on Chinese goods, and will continue to monitor China’s currency practices.

Gold prices were up last week, despite a hawkish tone from the Federal Reserve minutes on Thursday. The minutes indicated that a majority of members want to continue raising interest rates until the U.S economy shows signs of slowing down. However, the duration of a tighter policy remains unclear, as the minutes noted that “there is considerable uncertainty surrounding all estimates of the neutral federal funds rate.” This would likely be around the 3 percent level, which will not be reached until the second half of 2019, as the Fed has indicated it will raise rates three times next year. At the September meeting, the Fed removed the phrase “the stance of monetary policy remains accommodative”, which was considered outdated, given the policy of steady rate hikes. As rates approach the “neutral rate”, we could see further changes in language at upcoming policy meetings.

XAU/USD Fundamentals

Monday (October 22)

  • There are no U.S events

Tuesday (October 23)

  • 10:00 US Richmond Manufacturing Index. Estimate 25
  • 13:30 US FOMC Member Bostic Speaks

*All release times are DST

*Key events are in bold

XAU/USD for Monday, October 22, 2018

XAU/USD October 22 at 12:05 DST

Open: 1226.68 High: 1229.63 Low: 1220.20 Close: 1221.35

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1170 1204 1220 1236 1261 1284

XAU/USD ticked higher in the Asian session. the pair posted slight losses in European trade and this trend has continued in the North American session

  • 1220 was tested earlier in support. It is a weak line
  • 1236 is the next resistance line
  • Current range: 1220 to 1236

Further levels in both directions:

  • Below: 1220, 1204, 1170 and 1146
  • Above: 1236, 1261 and 1284

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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.