Gold slides below $1300 as threat of hard Brexit eases

Gold has posted sharp losses in Thursday trading, after posting gains on Wednesday. In the North American session, the spot price for one ounce of gold is $1295.06, down 1.10% on the day. It is a light day on the fundamentals front. Unemployment claims climbed to 229 thousand, above the estimate of 225 thousand. On Friday, the U.S. publishes the Empire State Manufacturing Index and UoM Consumer Sentiment.

The crisis around Brexit has reached a fever pitch this week, with the British parliament set to vote on Brexit for a third straight day. On Tuesday, lawmakers narrowly voted to remove the option of a no-deal Brexit. This vote is not binding on the government, but it’s clear that most MPs do not want a hard Brexit, in which Britain crashes out of the European Union without any agreement. Next stop on the parliamentary train is a vote on Thursday to extend Article 50, the mechanism of the Brexit withdrawal. Britain is currently scheduled to leave the E.U. on March 29. However, even if Article 50 is extended, the uncertainty will continue, and we can expect additional parliamentary votes next week. On the European side, all 27 members of the E.U. have to agree to an extension. It’s not clear how long an extension would last. Senior European officials have said that the extension could be a year or longer, but Prime Minister May would likely prefer a much shorter hiatus. There is also talk of a second referendum on Brexit, underscoring the political chaos which has gripped Britain.

With the U.S-China trade war showing signs of easing, there were expectations that President Trump and Chinese President Xi might hold a summit in late March. However, it was reported on Wednesday that the two leaders will not meet before April. This has raised concerns that the sides have not managed to resolve their differences. Trump has said that he is not in a rush to reach an agreement, but a deal with China would be a huge victory for Trump ahead of the U.S. election in 2020. Despite market disappointment over the delay in a Trump-Xi meeting, gold has been unable to take advantage, as the metal is sharply lower on Thursday.

Global markets gently simmer

Brexit and Trade Continue to Weigh on Growth Concerns

Trade Deal Delay

XAU/USD Fundamentals

Wednesday (March 13)

  • 8:30 US Core Durable Goods Orders. Estimate 0.1%. Actual -0.1%
  • 8:30 US Durable Goods Orders. Estimate -0.5%. Actual 0.4%
  • 8:30 US PPI. Estimate 0.2%. Actual 0.1%
  • 8:30 US Core PPI. Estimate 0.2%. Actual 0.1%
  • 10:00 US Construction Spending. Estimate 0.4%. Actual 1.3%
  • 10:30 US Crude Oil Inventories. Estimate 2.7M. Actual -3.9M
  • 13:01 US 30-year Bond Auction

Thursday (March 14)

  • 8:30 US Unemployment Claims. Estimate 225K
  • 10:00 US New Home Sales. Estimate 622K

*All release times are EST

*Key events are in bold

XAU/USD for Thursday, March 14, 2019

XAU/USD March 14 at 12:40 DST

Open: 1309.25 High: 1310.42 Low: 1292.93 Close: 1295.18

XAU/USD Technical

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

XAU/USD posted considerable losses in the Asian and European sessions. The pair posted small losses in North American trade

  • 1284 is under strong pressure in support.
  • 1306 has switched to a resistance role after strong losses by XAU/USD on Thursday
  • Current range: 1284 to 1306

Further levels in both directions:

  • Below: 1284, 1261 and 1243
  • Above: 1306, 1326, 1344 and 1365

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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.