Gold Stabilizes After Poor Start to Week

Gold has steadied on Tuesday, posting slight gains. In the North American session, spot gold is trading at $1247.95 per ounce. In economic news, CB consumer confidence rose to 118.9, beating the forecast of 116.1.

Investors are casting a nervous glance towards Thursday, as the US releases Final GDP for the first quarter. Preliminary GDP, which was released in May, came in at 1.2%, and this is the same estimate for the upcoming GDP report. Recent economic data has been softer than expected, notably construction and manufacturing reports. US durable goods releases were weak in May. Core Durable Goods broke a streak of two straight declines, but the weak gain of 0.1% missed expectations. Durable Goods declined 1.1%, its sharpest decline since June 2016. The slowdown in orders of business equipment could weigh on second quarter growth. Last week, it was the turn of construction numbers to disappoint, as Housing Starts and Building Permits both missed expectations. Consumer spending has also been softer than expected, and if Final GDP falls short of the modest estimate of 1.2%, the dollar could respond with losses.

Gold started the week with considerable losses, as risk appetite was strong. One reason for investor optimism is the positive tone emanating from the Federal Reserve. This month’s rate statement was surprisingly upbeat and the optimistic sentiment about the economy has since been reiterated by Fed policymakers. The odds of a rate hike in December have risen to 62%; early last week, the odds were hovering 50%. The likelihood of a September rate hike, however remains low, at just 13%. The Fed has all but promised one more rate hike in 2017, but if the economy slows down and the Trump administration remains paralyzed by scandals, then the Fed could get cold feet and delay a rate hike until 2018. The GDP release later next week will be a key test for the economy, and the likelihood of a December hike could sag if GDP misses expectations.

XAU/USD Fundamentals

Tuesday (June 27)

• 9:00 US S&P/CS Composite-20 HPI. Estimate 5.9%. Actual 5.7%
• 10:00 US CB Consumer Confidence. Estimate 116.1. Actual 118.9
• 10:00 US Richmond Manufacturing Index. Estimate 4. Actual 7
• 11:15 US FOMC Member Patrick Harker Speaks
• 13:00 US Fed Chair Janet Yellen Speaks
• 17:30 US FOMC Member Neel Kashkari Speaks

Wednesday (June 28)

• 10:00 US Pending Home Sales. Estimate 0.9%

*All release times are EDT

*Key events are in bold

XAU/USD for Tuesday, June 27, 2017

XAU/USD June 27 at 10:45 EST

Open: 1243.11 High: 1253.15 Low: 1241.13 Close: 1247.95

XAU/USD Technical

• XAU/USD showed limited movement in the Asian session. The pair posted gains in European trade and has posted slight losses in North American trade
• 1232 is providing support
• 1260 is the next resistance line
• Current range: 1232 to 1260

Further levels in both directions:

• Below: 1232, 1199 and 1170
• Above: 1260, 1285, 1307 and 1337

OANDA’s Open Positions Ratio

XAU/USD ratio is showing little movement in the Tuesday session. Currently, long positions have a majority (66%). This is indicative of XAU/USD continuing to climb to higher levels. 

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