Gold edges higher despite stronger risk appetite

Gold has edged higher in the Wednesday session, continuing the trend seen on Tuesday. In North American trade, the spot price for one ounce of gold is $1313.54, up 0.20% on the day. In the U.S., CPI ticked up to 0.0%, shy of the estimate of 0.1%. Core CPI posted a gain of 0.2%, matching the estimate. On Thursday, the U.S. publishes retail sales and PPI.

Gold often loses ground when investor optimism rises, but that hasn’t been the case this week. Risk appetite has improved, courtesy of positive news on two fronts. Domestically, lawmakers have tentatively agreed on a proposal which will avert another government shutdown, which would take effect on Friday. However, the deal needs to be approved by Congress and President Trump. The agreement does not provide Trump with funding for a border wall, and the deadlock between Congress and Trump over this issue triggered a government shutdown in January which lasted 35 days. Both sides are eager to avoid blame for a second shutdown, and Trump hinted earlier in the week that he would go along with the deal, albeit with reservations.

On the trade front, U.S. and Chinese officials are meeting for a third round of talks in Beijing. Investors have been frustrated by the lack of progress, but were relieved when Trump said that he could postpone a March 1 deadline for new tariffs on Chinese imports if the trade talks made sufficient progress. The U.S-China trade spat has rocked global equity markets and hurt global growth, which has boosted gold above the $1300 level. The metal vaulted 7.9% in the December-January period, but has settled down in February.

Risk appetite very much improved

U.S Dollar under pressure

Risk appetite still riding trade optimism wave

XAU/USD Fundamentals

Wednesday (February 13)

• 8:30 US CPI. Estimate 0.1%. Actual 0.0%
  
• 8:30 US Core CPI. Estimate 0.2%. Actual 0.2%
  
• 10:30 US Crude Oil Inventories. Estimate 2.1M. Actual 3.6M
• 14:00 US Federal Budget Balance. Estimate -10.5B

Thursday (February 14)

• 8:30 US Core Retail Sales. Estimate 0.0%
• 8:30 US Retail Sales. Estimate 0.1%
• 8:30 US PPI. Estimate 0.1%
• 8:30 US Core PPI. Estimate 0.2%
• 8:30 US Unemployment Claims. Estimate 225K

*All release times are EST

*Key events are in bold

XAU/USD for Wednesday, February 13, 2019

XAU/USD February 13 at 11:35 EST

Open: 1310.76 High: 1318.19 Low: 1308.21 Close: 1313.54

XAU/USD Technical

XAU/USD posted slight losses in the Asian session but then reversed directions and moved higher. The pair edged lower in European trade but has recovered in North American trade

• 1306 is providing support
• 1326 is the next resistance line
• Current range: 1306 to 1326
  

Further levels in both directions:

• Below: 1306, 1284, 1261 and 1236
• Above: 1326, 1344 and 1365

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