XAU/USD – Gold Edges Higher, Consumer Confidence Ahead

Gold has posted slight gains at the start of the week, trading close to the symbolic $1200 level. In Monday’s North American session, the pair is trading at $1196.30. On the release front, Pending Home Sales rebounded with a strong gain of 1.6%, matching the forecast. On Tuesday, the US releases CB Consumer Confidence, with the markets expecting a solid reading of 112.6 points.

Analysts had predicted that US economic growth would soften in the fourth quarter, and Advance GDP fell short of the estimate. The economy expanded 1.9%, shy of the estimate of 2.1%. Business investment and consumer spending remains solid and this trend is expected to continue into 2017. However, Trump’s protectionist rhetoric and action, which saw tensions escalate with Mexico last week, could darken the bright picture for the US economy. The markets are anxiously waiting for Trump to unveil details of an economic blueprint, and the continuing uncertainty could lead to higher gold prices due to heightened nervousness in the markets.

Donald Trump continues to stir controversy, after signing a host of executive orders last week which have been condemned both domestically and abroad. Trump has withdrawn from the Trans-Pacific Partnership and declared he will reopen the NAFTA trade agreement with Canada and Mexico. He has also ordered work to begin on a wall with Mexico and banned immigrants from seven Moslem countries. Trump’s unconventional and disjointed approach to international politics and trade could have major ramifications on global trade and could lead to financial instability in global markets, triggering volatility in the currency markets. Just a few days before being sworn in as president, Trump stated that the US dollar was “too strong”, blaming a weak Chinese currency. Predictably, the greenback lost ground after Trump’s remarks. It’s a safe bet that Trump’s offhand tweets and comments will continue to fuel market volatility.

XAU/USD Fundamentals

Monday (January 30)

• 8:30 US Core PCE Price Index. Estimate 0.1%
• 8:30 US Personal Spending. Estimate 0.4%
• 8:30 US Personal Income. Estimate 0.4%
• 10:00 US Pending Home Sales. Estimate 1.6%
• Tentative – US Loan Officer Survey

Upcoming Key Events

Tuesday (January 31)

• 10:00 US CB Consumer Confidence. Estimate 112.6

*All release times are EST

*Key events are in bold

XAU/USD for Monday, January 30, 2017

XAU/USD January 30 at 11:20 EST

Open: 1194.08 High: 1199.45 Low: 1188.25 Close: 1196.30

XAU/USD Technical

• XAU/USD showed limited movement in the European and Asian sessions. The pair has posted slight gains in the North American session
• 1174 is providing support
• 1199 is under pressure as resistance. It could break in the North American session
• Current range: 1174 to 1199

Further levels in both directions:

• Below: 1174, 1146 and 1130
• Above: 1199, 1232, 1260 and 1285

OANDA’s Open Positions Ratio

XAU/USD ratio has shown little movement in the Monday session. Long positions have a strong majority (70%), indicative of trader bias towards XAU/USD continuing to climb to higher levels.

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