Gold climbs after Trump tariff threat, but unable to consolidate

It has been a busy start to the week for gold. The base metal gained ground in Monday’s Asian session, but has since given up most of these gains. In the North American session, the spot price for one ounce of gold is $1280.118, up 0.08% on the day. On the fundamentals front, the sole event is a speech from FOMC member John Williams. On Tuesday, the U.S. releases JOLTS Job Openings.

President Trump’s warning of further tariffs against China sent equity markets sharply lower on Monday and briefly boosted gold prices, as nervous investors snapped up safe-haven assets such as gold. On Sunday, Trump threatened to raise tariffs on $200 billion worth of Chinese goods as early as Friday, from 10% to 25%. Trump sounded nonchalant about the trade talks, saying that even if an agreement wasn’t reached, U.S. coffers would benefit from the new tariffs. China has threatened to cancel the talks, although it’s unlikely that China will pull the plug. Still, the negotiations could stall, which would likely dampen risk appetite and boost gold prices.

Gold recorded strong gains on Friday, gaining 0.67 percent. The catalyst was mixed U.S. job numbers, as nonfarm payrolls were strong, but wage growth remained soft. Average Hourly Earnings edged up to 0.2%, up from 0.1%. However, this missed the estimate of 0.3%. Nonfarm payrolls sparkled, climbing to 263 thousand, up from 196 thousand a month earlier. The reading easily beat the forecast of 181 thousand. The unemployment rate dipped to 3.6% in April, down from 3.8% a month earlier. This marked the lowest unemployment rate since 1969.

Tariff threat turns risk appetite on its head

Risk slumps after Trump’s Trade Threats

XAU/USD Fundamentals

Monday (May 6)

  • 10:00 US FOMC Member Williams Speaks

Tuesday (May 7)

  • 10:00 US JOLTS Job Openings. Estimate 7.35M

*All release times are DST

*Key events are in bold

XAU/USD for Monday, May 6, 2019

XAU/USD May 6 at 11:55 DST

Open: 1279.07 High: 1285.86 Low: 1277.11 Close: 1280.11

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1218 1243 1261 1284 1306 1326

XAU/USD posted gains in the Asian session. The pair was flat in the European session. In North American trade, XAU/USD edged lower but has recovered most of these losses

  • 1261 is providing support
  • 1284 is weak resistance line. It was tested earlier on Monday.
  • Current range: 1261 to 1284

Further levels in both directions:

  • Below: 1261, 1243 and 1218
  • Above: 1284, 1306, 1326 and 1344

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.