Gold Pushes Above $1300 on Italy Tensions

Gold has posted gains in the Tuesday session, erasing the losses seen on Monday. In the North American session, the spot price for one ounce of gold is $1303.85, up 0.44% on the day. On the release front, CB Consumer Confidence dipped to 128.0, missing the estimate of 128.0 points. On Wednesday, there are two key events – ADP nonfarm payrolls and Preliminary GDP.

The markets are focused on geopolitical events this week. The political turmoil in Italy has unnerved investors and boosted gold prices, but the upward movement has been limited, as the much-anticipated summit between the U.S and North Korean leaders may take place. President Trump and North Korean leader Kim Jong-un are scheduled to meet in Singapore on June 12, but curiously, neither side will confirm whether the meeting is on. Last week, Trump sent a letter to Kim, saying that Trump was canceling the much-anticipated meeting. However, the White House has since sent a team to Singapore and a senior North Korean official is on his way to Washington to meet with Secretary of State Mike Pompeo. If there is confirmation that the meeting is on, traders can expect risk appetite to jump and gold prices to fall.

The drama in Italy is dominating the headlines this week. The political crisis started on the weekend, when President Sergio Mattarella vetoed a ministerial pick of the two parties which were expected to form a coalition, the League Nord and the Five Star Movement. Mattarella rejected the suggestion of Paolo Savona as economic minister, given that Savona is a firm critic of the euro and supports Italy exiting from the eurozone. The reaction from the two parties was fast and furious, with claims that Mattarella was a puppet of Germany and the EU, and there were even demands for his impeachment. The prime minister-elect, Giuseppe Conte, has given up his mandate to form a government, and Mattarella has invited Carlo Cottarelli, a former IMF economist, to form a temporary technocrat government. This could mean that Italy will hold another election in the fall, unless there are more political twists and turns in this crisis.

XAU/USD Fundamentals

Tuesday (May 29)

• 9:00 US S&P/CS Composite-20 HPI. Estimate 6.5%
• 10:00 US CB Consumer Confidence. Estimate 128.2. Actual 128.0

Wednesday (May 30)

• 8:15 US ADP Nonfarm Employment Change. Estimate 186K
• 8:30 US Preliminary GDP. Estimate 2.3%
• 8:30 US Goods Trade Balance. Estimate -71.2B
• 8:30 US Preliminary GDP Price Index. Estimate 2.0%
• 8:30 US Preliminary Wholesale Inventories. Estimate 0.4%
• 14:00 US Beige Book

*All release times are DST

*Key events are in bold

XAU/USD for Tuesday, May 29, 2018

XAU/USD May 29 at 12:05 DST

Open: 1298.13 High: 1306.64 Low: 1292.90 Close: 1303.85

XAU/USD Technical

XAU/USD showed little movement in the Asian session. The pair posted gains in European trade. XAU/USD posted losses in the North American session but has recovered

• 1285 is providing support
• 1307 is a weak next resistance line. It could break in the North American session
• Current range: 1285 to 1307

Further levels in both directions:

• Below: 1285, 1260 and 1236
• Above: 1307, 1337, 1375 and 1416

OANDA’s Open Positions Ratio

XAU/USD ratio is almost unchanged in the Tuesday session. Currently, long positions have a majority (66%), indicative of trader bias towards XAU/USD continuing to move to higher ground.

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.