Gold: Volatility continues as tariff war shakes up commodities

Gold has retracted on Tuesday, after starting the week with sharp gains. In the North American session, the spot price for one ounce of gold is $1294.64, down 0.39% on the day. There are no major U.S. events on the schedule. On Wednesday, the U.S. releases retail sales reports.

After months of negotiations and assurances that a U.S-China trade deal was imminent, investors were treated to another round of tariffs and counter-tariffs. This has led to sharp swings in the equity and commodity markets. On Friday, the U.S. raised tariffs on $200 billion in Chinese goods, from 10% to 25%. The Chinese response was vigorous, with Beijing announcing on Monday that it would slap tariffs on $60 billion of U.S products. Risk appetite has been hit had, and gold took full advantage on Monday, soaring 1.0%. Gold prices have reversed directions on Tuesday, and traders should be prepared for further swings this week.

Despite the rise in tensions between China and the U.S., the new tariffs do not take effect immediately. The U.S. tariffs do not apply to Chinese goods that are in transit, and the shipping of goods across the Pacific can take up to three weeks. The Chinese tariffs do not kick in until June. This hiatus gives negotiators some breathing room before the tariffs take effect.

Commodities Weekly: Commodities reel under tariff war escalation

From BRICS to WOWS

XAU/USD Fundamentals

Tuesday (May 14)

  • 6:00 US NFIB Small Business Index. Estimate 102.3. Actual 103.5
  • 8:30 US Import Prices. Estimate 0.7%. Actual 0.2%
  • 12:45 US FOMC Member George Speaks

Wednesday (May 15)

  • 8:30 US Core Retail Sales. Estimate 0.7%
  • 8:30 US Retail Sales. Estimate 0.2%
  • 8:30 US Empire State Manufacturing Index. Estimate 8.2

*All release times are DST

*Key events are in bold

XAU/USD for Tuesday, May 14, 2019

XAU/USD May 14 at 12:05 DST

Open: 1299.71 High: 1303.36 Low: 1293.91 Close: 1294.64

XAU/USD Technical

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

XAU/USD posted small gains in the Asian session but then retracted. The pair showed limited movement in the European session and has posted losses in North American trade

  • 1284 is providing support
  • 1306 is the next resistance line
  • Current range: 1284 to 1306

Further levels in both directions:

  • Below: 1284, 1261, 1243 and 1218
  • Above: 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.