Gold slides as Trump tariff threats boost U.S dollar

Gold has posted sharp losses in the Tuesday session. In North American trade, the spot price for one ounce of gold is $1212.37, down 0.87% on the day. In economic news, CB Consumer Confidence dipped to 135.7, missing the estimate of 136.2 points. On Wednesday, the U.S. publishes Preliminary GDP for the third quarter, with a forecast of 3.6%.

Investors will be keeping a close eye on the G-20 summit in Argentina later this week. President Trump will meet with Chinese President Xi Jinping, and the stakes could not be higher, given the full-blown trade war between the world’s two largest economies. President Trump has taken a tough line ahead of the summit, threatening to raise the tariffs from 10 percent to 25 percent on $250 billion worth of Chinese goods. If Trump makes good on his threat, we could see sharp volatility in the currency markets, with the U.S dollar likely making sharp gains. However, the unpredictable Trump is known to prefer to reach a deal whenever possible, so his sharp rhetoric could be some grandstanding ahead of his crucial meeting with Xi. If the two leaders can “agree to disagree” and continue talking, investors will breathe a deep sigh of relief.

The Federal Reserve is also keeping an anxious eye on the U.S-China trade war, and there is growing speculation that it will scale back its rate hike plans for 2019. Just a few months ago, there had been talk of up to four rate increases next year, but with the U.S economy slowing signs of slowing down, the Fed could respond with just two or three hikes. A December hike is widely expected, with the CME Group pegging the odds at 79 percent. However, after that, the Fed is likely to remain on the sidelines until at least March 2019.

XAU/USD Fundamentals

Tuesday (November 27)

  • 8:30 US FOMC Member Clarida Speaks
  • 9:00 US HPI. Estimate 0.4%. Actual 0.2%
  • 9:00 US S&P/CS Composite-20 HPI. Estimate 5.3%. Actual 5.1%
  • 14:30 US FOMC Member Bostic Speaks
  • 10:00 US CB Consumer Confidence. Estimate 136.2. Actual 135.7
  • 12:00 US Fed Chair Powell Speaks

*All release times are EST

*Key events are in bold

 

XAU/USD for Tuesday, November 27, 2018

XAU/USD November 27 at 12:15 EST

Open: 1222.95 High: 1225.36 Low: 1212.69 Close: 1212.37

XAU/USD Technical

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

XAU/USD was flat in the Asian session. The pair edged higher in European trade but has retracted sharply in the North American session

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

Further levels in both directions:

  • Below: 1204, 1170 and 1146
  • Above: 1220, 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

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.