Gold Rally Continues on Soft US Core Durable Goods, Housing Reports

Gold has posted slight gains in the Monday session. In North American trade, the spot price for one ounce is $1260.49. On the release front, it was a mixed day for US data. Core Durable Goods Orders declined 0.2%, short of the estimate of +0.5%. However, Durable Goods Orders jumped 1.8%, beating the forecast of 1.6%. Pending Home Sales disappointed with a sharp drop of 2.8%, compared to the estimate of a 1.1% gain. On Tuesday, the US publishes Preliminary GDP and CB Consumer Confidence. As well, President Trump will address a joint session of Congress.

As the US dollar struggles, gold prices continue to move higher. Gold prices have risen 1.9% since Wednesday, as the metal trades at highest level since November 2016. Monday’s weak numbers come on the heels of mixed numbers on Friday. Revised UoM Consumer Sentiment dropped to 96.3 in February, compared to 98.5 a month earlier. Still, this figure edged above the forecast of 96.1. In the housing sector, New Home Sales improved to 555 thousand in January, but this was well short of the forecast of 575 thousand.

Donald Trump can check off his first month in office, but it has been anything but smooth sailing. The new president has been involved in constant sparring with the media and continues to struggle trying to fill key cabinet positions. Trump will address Congress on Tuesday and the nation will be listening closely. Will we see the combative, outspoken Trump, or will he opt to tone it down and act in a conciliatory manner? In order to pass key legislation, Trump will have to make nice with lawmakers from both sides of the fence, and this speech would be an ideal time to offer a hand of cooperation rather than combat. The markets will be looking for some details about the administration’s economic plan – if Trump fails to deliver, market sentiment could sour, dragging down the US dollar.

XAU/USD Fundamentals

Monday (February 27)

• 8:30 US Core Durable Goods Orders. Estimate +0.5%. Actual -0.2%
• 8:30 US Durable Goods Orders. Estimate 1.6%. Actual 1.8%
• 10:00 US Pending Home Sales. Estimate 1.1%. Actual -2.8%
• 11:00 US FOMC Member Robert Kaplan Speech

Tuesday (February 28)

• 8:30 US Preliminary GDP. Estimate 2.1%
• 10:00 US CB Consumer Confidence. Estimate 111.1

*All release times are GMT

*Key events are in bold

XAU/USD for Monday, February 27, 2017

XAU/USD February 27 at 13:10 EST

Open: 1255.80 High: 1263.89 Low: 1253.36 Close: 1259.73

XAU/USD Technical

• XAU/USD was flat in the Asian and European sessions. The pair has posted small gains in North American trade
• 1232 is providing support
• 1260 is a weak resistance line and could break in the North American session
• Current range: 1232 to 1260

Further levels in both directions:

• Below: 1232, 1199, 1174 and 1146
• Above: 1260, 1285 and 1307

OANDA’s Open Positions Ratio

XAU/USD ratio is showing long positions with a majority (57%), indicative of trader bias towards XAU/USD continuing its rally.

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