Gold punches past $1200 as key manufacturing report slides

Gold has started the week with strong gains. In Monday’s North American trade, the spot price for one ounce of gold is $1202.93, up 0.74% on the day. In the U.S, a key manufacturing report disappointed. The Empire State Manufacturing Index dropped sharply, falling from 25.6 to 19.0 points. This missed the estimate of 23.2 and marked the weakest reading since April.

U.S indicators ended the week with mixed numbers. Retail sales in August dropped to 0.1%, down from 0.5% a month earlier. This missed the estimate of 0.4%. Core retail sales followed a similar trend, falling from 0.6% to o.3%. It missed the forecast of 0.5%. These key consumer spending numbers come on the heels of CPI, which came in at just 0.2% and missed the estimate of 0.3%. There was better news from UoM Consumer Sentiment in September, which jumped to 100.8, above the estimate of 96.7 points, This marked the first time that the indicator cracked the 100-level since March.

Is the US-China trade war about to enter a new phase? The world’s two largest economies have already exchanged tariffs, and President Trump has threatened to sharply up the ante and impose tariffs of some $200 billion on China. Trump may be bluffing, but his rhetoric could torpedo trade talks with China. The timing of any new tariffs remains uncertain, as well as the level of the tariffs – will they be 10% or a far more punitive 25%? Investors remain on alert, and the specter of another tariff announcement from the U.S and the likely retaliatory response from China could boost the dollar this week against the euro. If the U.S does go ahead with further tariffs, it could put a chill on more than the equity markets. According to a report from UBS, a tariff of 10% on Chinese products could slow U.S growth in the fourth quarter and result in the Federal Reserve skipping a December rate hike.

XAU/USD Fundamentals

Monday (September 17)

• 8:30 US Empire State Manufacturing Index. Estimate 23.2. Actual 19.0

*All release times are DST

*Key events are in bold

XAU/USD for Monday, September 17, 2018

XAU/USD September 17 at 12:25 DST

Open: 1194.06 High: 1204.86 Low: 1192.89 Close: 1202.93

XAU/USD Technical

XAU/USD showed little movement in the Asian session. The pair posted gains in the European session and the upward movement has continued in North American trade.

• 1170 is providing support
• 1204 is fluid. Currently, it is a weak resistance line
• Current range: 1170 to 1204

Further levels in both directions:

• Below: 1170, 1146 and 1115
• Above: 1204, 1220, 1236 and 1261

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