Gold Listless as Investors Look for Cues

Gold is almost unchanged in the Tuesday session. In North American trade, the spot price for one ounce of gold is $1292.77, up 0.01% on the day. It’s another quiet day on the release front, with no key indicators. The sole event was the Richmond Manufacturing Index, which jumped to 16, well above the estimate of 9 points. On Wednesday, the Federal Reserve will release the minutes of its May policy meeting.

The trade battle between the US and China has taken a pause, and that could spell trouble for safe-haven gold. After weeks of sharp rhetoric and stiff tariffs, there was a breakthrough of sorts on Sunday. US Treasury Secretary Steven Mnuchin announced that the two sides had made significant progress and the trade war was being ‘put on hold’. Just last week, the White House sounded pessimistic about a deal being reached with China. The two economic giants have imposed tariffs on one another in recent weeks, worth billions in trade. These moves had raised fears of a bilateral trade war between the two largest economies in the world. The respite means that the sides are talking to each other, and that meant that the US can air its grievance over its massive trade deficit with China, which President Trump has long complained is a result of a non-level playing field. In addition to the trade deficit, the US wants to discuss technology transfers and cyber theft.

Gold prices continue to show little movement, but that could change on Wednesday, when the Federal Reserve releases the minutes of its policy meeting earlier in May. The Fed did not raise rates at the meeting, but a strong US economy has raised expectations that the Fed will press the rate trigger in June – according to the CME Group, the odds of a June increase stand at 95%. The markets will be looking for some guidance from the May minutes, and if the minutes are hawkish, traders can expect the dollar to post gains against its rivals.

XAU/USD Fundamentals

Tuesday (May 22)

  • 9:59 US Richmond Manufacturing Index. Estimate 9. Actual 16

Wednesday (May 23)

  • 10:00 US New Home Sales. Estimate 680K
  • 14:00 US FOMC Meeting Minutes

*All release times are DST

*Key events are in bold

XAU/USD for Tuesday, May 22, 2018

XAU/USD May 22 at 12:10 DST

Open: 1292.33 High: 1293.15 Low: 1291.13 Close: 1292.77

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1236 1260 1285 1307 1337 1375

XAU/USD edged lower in the Asian session but recovered in European trade. The pair has posted small losses in the North American session

  • 1285 is providing support
  • 1307 is the next resistance line
  • 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 (70%), indicative of trader bias towards XAU/USD breaking out and moving 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.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.