Gold rally continues on weak U.S. inflation data, Brexit turmoil

Gold has posted considerable gains in Wednesday trading, continuing the upward movement seen on Tuesday. In the North American session, the spot price for one ounce of gold is $1308.38, up 0.54% on the day. In the U.S., durable goods orders gained 0.4%, compared to an estimate of -0.5%. Core durable goods orders declined by 0.1% shy of the estimate of 0.1%. Inflation indicators remain low, as PPI and Core PPI both came in at 0.2%. On Thursday, the U.S. releases unemployment claims and new home sales.

U.S. consumer inflation remains well below the Federal Reserve’s target of 2.0 percent, so there is little pressure on the Fed to raise rates anytime soon. Policymakers have been signaling that the Fed could stay on the sidelines until the second half of 2019, and this stance was underscored by Fed Chair Powell, in a television interview on Sunday. Powell left no doubt about where the Fed stands, saying that the Fed would remain patient and was in no hurry to change interest rate policy. The dovish stance of the Fed could weigh on the dollar and boost gold prices, as a lack of rate hikes makes the greenback less attractive to investors.

Gold tends to move higher in times of uncertainty, and the crisis around Brexit has boosted gold prices on Wednesday. Prime Minister May suffered another defeat in parliament on Tuesday, as lawmakers once again overwhelmingly rejected the government’s withdrawal proposal. despite extensive lobbying by May. Later on Wednesday, parliament votes to rule out a no-deal Brexit. Parliament is badly fractured over Brexit, but few MPs want to crash out of Europe, which could have a devastating effect on Britain’s economy. The no-deal proposal is likely to be adopted, which means that parliament would vote on Thursday on a request to extend Article 50, the mechanism for Brexit. However, it’s far from clear how long the delay would last, or if the E.U. would agree to an extension. With more drama expected in parliament in the next 48 hours, traders should be prepared for further volatility from gold.

Pound steadies ahead of next Brexit vote

Global markets gently simmer

Brexit and Trade Continue to Weigh on Growth Concerns

XAU/USD Fundamentals

Wednesday (March 13)

  • 8:30 US Core Durable Goods Orders. Estimate 0.1%. Actual -0.1%
  • 8:30 US Durable Goods Orders. Estimate -0.5%. Actual 0.4%
  • 8:30 US PPI. Estimate 0.2%. Actual 0.1%
  • 8:30 US Core PPI. Estimate 0.2%. Actual 0.1%
  • 10:00 US Construction Spending. Estimate 0.4%. Actual 1.3%
  • 10:30 US Crude Oil Inventories. Estimate 2.7M. Actual -3.9M
  • 13:01 US 30-year Bond Auction

Thursday (March 14)

  • 8:30 US Unemployment Claims. Estimate 225K
  • 10:00 US New Home Sales. Estimate 622K

*All release times are EST

*Key events are in bold

XAU/USD for Wednesday, March 13, 2019

XAU/USD March 13 at 12:35 DST

Open: 1301.45 High: 1309.47 Low: 1300.69 Close: 1308.38

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1261 1284 1306 1326 1344 1365

XAU/USD posted slight gains in the Asian and European sessions. The pair is steady in North American trade

  • 1306 has switched to a support role after strong gains by XAU/USD on Wednesday
  • 1326 is the next resistance line
  • Current range: 1306 to 1326

Further levels in both directions:

  • Below: 1306, 1284, 1261 and 1243
  • Above: 1326, 1344 and 1365

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.