Gold has resumed its losing ways in the Thursday session, after showing little change on Wednesday. In North American trade, the spot price for one ounce of gold is $1217.53, down 0.83% on the day. On the release front, manufacturing and employment data were better than expected. The Philly Fed Manufacturing Index climbed to 25.7, easily beating the estimate of 21.6 points. Unemployment claims dropped to 207 thousand, better than the estimate of 220 thousand.
The escalating trade war between the U.S and its major trading partners, which could hurt the U.S economy, is fast becoming a major concern for the Federal Reserve. The Fed’s Beige Book in July, which was released on Wednesday, had over 30 references to “tariffs”. Most of the twelve Fed regional districts referred to tariffs in their individual reports, which make up the Beige Book. Some Fed policymakers have also voiced their concern over the impact that tariffs could have on the U.S economy and is an issue the Fed will have to take into consideration, as it mulls over rate policy for the next six months.
With the U.S economy in excellent shape, Jerome Powell didn’t have to look far to reaffirm his positive outlook on the U.S economy in testimony before the Senate Banking Committee earlier this week. Powell said that he expected the labor market to remain tight and inflation to stay close to the Fed’s target of 2 percent for the next several years. Powell added that the Fed would continue to gradually raise interest rates. Lawmakers appeared satisfied with current monetary policy, but Powell did face some pointed questions regarding the escalating trade war, which has raised concerns that the economy could take a downturn if the tariff battles continue. The Fed continues to project two more rate hikes in the second half of 2018, most likely in September and December. According to the CME Group (NASDAQ:CME), the likelihood of a quarter-point rate hike in September is 84 percent.
XAU/USD Fundamentals
Thursday (July 19)
- 8:30 US Philly Fed Manufacturing Index. Estimate 21.6. Actual 25.7
- 8:30 US Unemployment Claims. Estimate 220K. Actual 207K
- 9:00 US FOMC Member Randal Quarles Speaks
- 10:00 US CB Leading Index. Estimate 0.4%
- 10:30 US Natural Gas Storage. Estimate 58B
Friday (July 20)
- Tentative – OEPC-JMMC Meetings
*All release times are DST
*Key events are in bold
XAU/USD for Thursday, July 19, 2018
XAU/USD July 19 at 11:25 DST
Open: 1227.54 High: 1228.58 Low: 1211.60 Close: 1217.37
XAU/USD Technicals
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1146 | 1170 | 1204 | 1220 | 1236 | 1260 |
XAU/USD posted small losses in the Asian session. The pair was down sharply in European trade but has reversed directions in North American trade and has edged higher
- 1204 is providing support
- 1220 has switched to a resistance role as XAU/USD has posted losses on Thursday. It is a weak line
- Current range: 1204 to 1220
Further levels in both directions:
- Below: 1204 and 1170 and 1146
- Above: 1220, 1236, 1260 and 1285