Gold plunges to 3-week low as dollar climbs on trade talk news

Gold has dropped sharply on Thursday, heading lower for a third straight session. In North American trade, the spot price for one ounce of gold is $1289.80, down 1.53% on the day. In economic news, U.S. Final GDP for the fourth quarter posted a 2.2% gain, shy of the estimate of 2.4%. Unemployment claims fell to 211 thousand, easily beating the estimate of 221 thousand. The U.K. will release GfK consumer confidence, with a weak reading of -14 expected. On Friday the U.S. releases consumer spending and inflation numbers.

There was positive news on the trade war front, as negotiations between the U.S. and China continue. A report on Thursday noted that the sides have made progress in all areas, raising risk appetite at the expense of safe-haven gold. U.S. Treasury Secretary Robert Mnuchin is in Beijing for the latest round of talks, raising hopes that an agreement is not far off.

Global trade tensions have weighed on inflation levels in the developed economies, and the U.S. is no exception. However, with the Fed saying it will put a hold on rates until 2020, could that change? At the Fed policy meeting, policymakers lowered their inflation forecast for 2020, citing weakness in the Chinese and European economies. However, the chief economist of Credit Suisse, James Sweeney, has taken a different tack, saying that U.S. inflation could climb as high as 2.3% next year, in response to the lack of rate hikes. Sweeney said that although inflation remains below the Fed target of 2.0%, there are signs in the services sector of inflation picking up.

The Turkish delight that bites

Dollar climbs to 3-week high despite GDP revision

XAU/USD Fundamentals

Thursday (March 28)

  • 7:15 US FPMC Member Quarles Speaks
  • 8:30 US Final GDP. Estimate 2.4%. Actual 2.2%
  • 8:30 US Final GDP Price Index. Estimate 1.8%. Actual 1.7%
  • 8:30 US Unemployment Claims. Estimate 222K
  • 9:30 US FOMC Member Clarida Speaks
  • 9:30 US FOMC Member Bowman Speaks
  • 10:00 US Pending Home Sales. Estimate 0.1%. Actual -1.0%
  • 10:30 US Natural Gas Storage. Estimate -43B
  • 17:20 FOMC Member Bullard Speaks

Friday (March 29)

  • 8:30 US Core PCE Price Index. Estimate 0.2%
  • 8:30 US Core Personal Spending. Estimate 0.3%
  • 9:45 Chicago PMI. Estimate 61.1
  • 10:00 UoM Revised Consumer Sentiment. Estimate 97.8

*All release times are EST

*Key events are in bold

XAU/USD for Thursday, March 28, 2019

XAU/USD March 28 at 12:45 DST

Open: 1309.80 High: 1312.36 Low: 1289.01 Close: 1289.80

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1243 1261 1284 1306 1326 1344

XAU/USD was flat in the Asian session. The pair posted sharp losses in European trade and this trend has continued in North American trade

  • 1284 is providing support
  • 1306 has switched to a resistance role after sharp losses by XAU/USD on Thursday
  • Current range: 1284 to 1306

Further levels in both directions:

  • Below: 1284, 1261 and 1243
  • Above: 1306, 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.