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Gold Slips As U.S. Dollar Selloff Hits The Brakes

Published 01/30/2018, 12:04 AM
Updated 03/05/2019, 07:15 AM

Gold has started the week posting losses. In Monday’s North American trading, the spot price for an ounce of gold was $1341.32, down 0.62% on the day.

January has been good to gold, with the metal climbing 2.8% during the month. Gold prices touched $1366 last week, the highest level since August 2017.

The US dollar selloff was in full flight on Wednesday, as the greenback tumbled against both gold and other major currencies following comments from U.S. Treasury Secretary Steven Mnuchin. Speaking in Davos, Mnuchin said that the country was comfortable with a low dollar. This in turn drew a rebuke from ECB President Mario Draghi, who accused the U.S. administration of being strategic with the exchange rate. Mnuchin later backtracked, claiming that his remarks had been taken out of context and that he was in favor of a stronger dollar.

In the U.S., fourth-quarter GDP forecasts had recently pointed to strong growth of 3% or higher. This resulted in some disappointment on Friday, as Advance GDP came in at 2.6%. The economy grew 2.3% in 2017, compared to 1.6% in 2016. Growth in Q4 was affected by stronger consumer spending, which led to a surge in imports. The increase in consumer spending also boosted inflation, as the personal consumption expenditures index, which the Fed prefers to use, unveiled a 1.9% surge in Q4 on Monday, up from a 1.3% rise in Q3. A strong economic trend has mainly favoured the manufacturing sector, as durable goods orders hit 2.9% in December, crushing the estimate of 0.6%. This was the highest gain in six months, and helped make 2017 a banner year: the indicator increased an aggregate 5.8%, marking the sharpest yearly expansion since 2011.

On the release front, personal spending slowed to 0.4%, shy of the 0.6% estimates. On Tuesday, the key indicator is the CB Consumer Confidence, while U.S President Donald Trump will deliver the closely-watched State of the Union address.

XAU/USD Fundamentals

Monday (January 29)

  • 8:30 US Core PCE Price Index. Estimate 0.2%. Actual 0.2%
  • 8:30 US Personal Spending. Estimate 0.5%. Actual 0.4%
  • 8:30 US Personal Income. Estimate 0.3%. Actual 0.4%

Tuesday (January 30)

  • 10:00 US CB Consumer Confidence. Estimate 123.2
  • 21:00 President Trump Speaks

*All release times are GMT

*Key events are in bold

XAU/USD for Monday, January 29, 2018

Gold Chart for Jan 28-29, 2018

XAU/USD January 29 at 12:50pm EDT

Open: 1349.77 High: 1352.50 Low: 1337.65 Close: 1341.32

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1285 1307 1337 1375 1416 1433
  • XAU/USD was flat in the Asian session. XAU/USD posted slight losses in European trade and continues to move lower in the North American session
  • 1337 was tested earlier in support and is weak line
  • 1375 is the next line of resistance
  • Current range: 1337 to 1375

Further levels in both directions:

  • Below: 1337, 1307, 1285 and 1260
  • Above: 1375, 1416 and 1433

OANDA’s Open Positions Ratio

In Monday session, XAU/USD ratio is showing short positions with a majority (55%). This is indicative of trader bias towards XAU/USD continuing to lose ground.

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