Gold under pressure after sharp drop from $1300

Gold is trading sideways in the Monday session. In North American trade, the spot price for one ounce of gold is $1278.63, down 0.09% on the day. It’s a quiet start to the week, with no major releases out of the U.S. On Tuesday, the focus is on construction numbers, with the release building permits and housing starts.

Are we heading for a global trade war? The markets are certainly concerned after U.S President Trump imposed further tariffs on some $50 billion of Chinese products on Friday. China has promised to retaliate against U.S imports, as trade ties between the world’s two largest economies continue to deteriorate. With the U.S recently slapping tariffs on the EU, Mexico and Canada, it is no wonder that investor anxiety has risen.

Tariffs aside, trade negotiations on the NAFTA agreement remain deadlocked. Canada is deadset against a U.S demand for a sunset clause after five years, which would require the parties to hammer out a new agreement. As well, Mexico and Canada are not happy with U.S demands to raise the American content of any vehicle produced in any of the three countries, which would significantly alter the NAFTA auto pact. Mexico is holding general elections on July 1, and a left-wing candidate, Andrés Manuel López Obrador, leads in the polls. If  López Obrador becomes president, it could mean even more complications for the NAFTA talks.

XAU/USD Fundamentals

Monday (June 18)

• 10:00 US NAHB Housing Market Index. Estimate 70
• 13:00 US FOMC Member Rafael Bostic Speaks
• 16:00 US FOMC Member John William Speaks

Tuesday (June 19)

• 8:30 US Building Permits. Estimate 1.35M
• 8:30 US Housing Starts. Estimate 1.31M

*All release times are DST

*Key events are in bold

XAU/USD for Monday, June 18, 2018

XAU/USD June 18 at 12:35 DST

Open: 1279.66 High: 1282.46 Low: 1277.88 Close: 1278.63

XAU/USD Technical

XAU/USD showed little movement in the Asian and European sessions. The pair has posted small losses in North American trade

• 1260 is providing support
• 1285 is the next resistance line
• Current range: 1260 to 1285

Further levels in both directions:

• Below: 1260, 1236, 1220 and 1204
• Above: 1285, 1307, 1322 and 1337

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.