Gold steadies after brief retreat, investors eye State of Union address

Gold has reversed directions, posting gains in the Tuesday session. In North American trade, the spot price for one ounce of gold is $1314.55, up 0.22% on the day. In the U.S., ISM Non-Manufacturing PMI dipped to 56.7 shy of the estimate of 57.2 points. Later on Tuesday, President Trump delivers the State of Union address before Congress. On Wednesday, Federal Reserve Chair Powell will speak at an event in Washington.

Investors will be keeping a close eye on President Trump’s State of the Union address, and the response of Wall Street to the speech could impact gold prices. The speech was almost cancelled over the government shutdown, but Trump unexpectedly agreed to provide funding for government services for a 3-week period. Trump will likely mention the deadlock with Congress over the border wall, as well as plans to meet the Chinese president to discuss the trade war. If Trump makes a surprise announcement about a meeting with North Korean leader Kim, risk appetite would jump and gold prices would likely decline.

The U.S-China trade war has rocked the equity markets and dampened global growth. This has had a chilling effect on risk appetite, which boosted gold prices in December and January. If the global trade war continues, traders can expect gold prices to continue to rally. However, investors are cautiously optimistic after the second round of trade talks between China and the U.S. in late January. President Trump is planning to meet Chinese President Xi Jinping ahead of the March 1 deadline, in which Trump has threatened to slap further tariffs on China if a deal is not reached.

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Dollar position taking requires conviction

Futures higher ahead of State of the Union

XAU/USD Fundamentals

Tuesday (February 5)

• 10:00 US ISM Non-Manufacturing PMI. Estimate 57.2. Actual 56.7
  
• Tentative – US IBD/TIPP Economic Optimism. Estimate 53.1
• 21:00 US President Trump State of the Union Address

Wednesday (February 6)

• 19:00 US Fed Chair Powell Speaks

*All release times are EST

*Key events are in bold

XAU/USD for Tuesday, February 5, 2019

XAU/USD February 5 at 12:45 EST

Open: 1311.71 High: 1316.95 Low: 1310.81 Close: 1314.55

XAU/USD Technical

XAU/USD posted small gains in the Asian session. The pair edged lower in the European session but then recovered. XAU/USD is showing limited movement in North American trade

• 1306 is providing support
• 1326 is the next resistance line
• Current range: 1306 to 1326
  

Further levels in both directions:

• Below: 1306, 1284, 1261 and 1236
• Above: 1326, 1344 and 1365

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