Gold jumps as investors eye U.S-China trade talks

Gold has posted strong gains in the Tuesday session. In North American trade, the spot price for one ounce of gold is $1337.59, up 0.83% on the day. Gold is currently at its highest level since April 2018. On the release front, the sole U.S. indicator is a minor housing report. On Wednesday, the FOMC releases the minutes of its January policy meeting.

Investors are keeping a close look at U.S-China trade talks, which continue this week in Washington. This will be the fourth round of talks, as the sides look to ease trade tensions after months of tit-for tat tariffs which have hurt global growth and rocked the stock markets. Treasury Secretary Steven Mnuchin joined the talks last week and called the negotiations “productive”. If there are tangible signs of progress, risk appetite could jump and dampen gold’s current rally.

Gold is sensitive to interest rate policy so traders should treat the Fed minutes as a market-mover. The Fed acted aggressively in 2018, boosting rates four times in order to keep the red-hot U.S. economy from overheating. Since raising rates in December, however, the Fed has changed direction and become much more dovish. In late 2018, there was talk of up to four rate hikes in 2019, but the Fed has revised its forecast to two hikes. The markets have gone further, projecting no rate increases this year, and there has even been talk of a rate cut in late 2019. In the January rate statement, the Fed discarded previous pledges of “further gradual increases” in interest rates, and said it would be “patient” before any further hikes.

XAU/USD Fundamentals

Tuesday (February 19)

  • 10:00 US NAHB Housing Market. Estimate 59

Wednesday (February 20)

  • 14:00 US FOMC Meeting Minutes

*All release times are EST

*Key events are in bold

XAU/USD for Tuesday, February 19, 2019

XAU/USD February 19 at 12:10 EST

Open: 1326.50 High: 1339.52 Low: 1323.02 Close: 1337.59

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1284 1306 1326 1344 1365 1392

XAU/USD posted small gains in the Asian session. The pair recorded further gains in European trade and has continued with strong gains in North American trade

  • 1326 is providing support
  • 1344 is the next resistance line
  • Current range: 1326 to 1344

Further levels in both directions:

  • Below: 1326, 1306, 1284 and 1261
  • Above: 1344, 1365 and 1392

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.