Gold continues to lose ground on Thursday. In the North American session, the spot price for one ounce of gold is $1314.92, down 0.38% on the day. Gold prices have slipped 1.1% and are trading at their lowest levels since February 15. On the fundamental front, Advance GDP expanded 2.6% in the fourth quarter, above the estimate of 2.2%. Chicago PMI climbed to 64.7, easily beating the forecast of 57.3 points. Unemployment claims rose to 225 thousand, above the estimate of 221 thousand. On Friday, the U.S. will release Core PCE Price Index and UoM Consumer Sentiment.
The Federal Reserve has switched to dovish mode after raising rates four times in 2018. This stance was reiterated in Fed Chair Powell’s testimony on Capitol Hill on Tuesday and Wednesday. Powell preached patience with regard to changes in interest rate levels. The Fed chair stated that the Fed was in “no rush to make a judgment” and made reference to “conflicting signals in the economy”. The labor picture remains bright, with strong hiring and low unemployment. At the same time, consumer spending and business investment have been soft. Powell was optimistic about the U.S. economy, but said that the lower global growth and uncertainty over trade was weighing on the economy. The markets are expecting the Fed to remain on the sidelines in May and June, meaning that the first hike of 2019 may be on hold until the second half of the year.
Investors remain confident that the U.S. and China will reach an agreement on trade, which would greatly reduce trade tensions which have hurt global economic growth. President Trump has said he will not impose punishing new tariffs on March 1, and there is even talk of a meeting between Trump and Chinese President Xi at the end of March if the sides reach an agreement. However, significant questions remain. With almost no news about the substance of the talks, it remains unclear if China will agree to substantial structural changes in trade, as demanded by the United States. Another question mark is whether the current set of tariffs will be completely removed if a deal is reached. Still, if the sides reach a deal, it could lower risk apprehension and make gold less attractive.
Monday (February 28)
- 8:00 US FOMC Member Clarida Speaks
- 8:30 US Advance GDP. Estimate 2.2%. Actual 2.6%
- 8:30 US Advance GDP Price Index. Estimate 1.7%. Actual 1.8%
- 8:30 US Unemployment Claims. Estimate 221K. Actual 225K
- 9:45 US Chicago PMI. Estimate 57.3. Actual 64.7
- 10:30 US Natural Gas Storage. Estimate -172B. Actual -166B
- 20:15 US Fed Chair Powell Speaks
Friday (March 1)
- 10:00 US Core PCE Price Index. Estimate 0.2%
- 10:00 US UoM Consumer Sentiment. Estimate 95.8
*All release times are EST
*Key events are in bold
XAU/USD for Thursday, February 28, 2019
XAU/USD February 28 at 11:45 EST
Open: 1320.02 High: 1327.34 Low: 1313.08 Close: 1314.92
XAU/USD posted slight losses in the Asian session. The pair made considerable gains in European trade. The pair is down sharply in North American trade
- 1306 is providing support
- 1326 is the next resistance line
- Current range: 1306 to 1326
Further levels in both directions:
- Below: 1306, 1284 and 1261
- Above: 1326, 1344, 1365 and 1392
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