Gold Slide Continues as US Manufacturing PMI Sparkles

Gold has started the week with considerable losses. Spot gold is trading at $1222.08 per ounce, down 1.56% on the day. On the release front, today’s key event is ISM Manufacturing PMI. The index climbed to 57.8 in June, beating the estimate of 55.0. On Tuesday, US markets are closed for the Fourth of July holiday.

Gold prices continue to sag, and the metal dropped to $1220 earlier in the day, its lowest level since May 11. Gold is down 4.4% since Thursday, when the metal appeared headed to break above the symbolic $1300 level. The week started with good news from the manufacturing sector, as ISM Manufacturing PMI improved to 57.8, its highest level since November 2014. Global economic conditions have improved, and a stronger demand for US exports has boosted the manufacturing sector.

The US economy did indeed slow down in the first quarter, but the downturn was not as bad as feared. On Thursday, revised GDP reading was raised to 1.4%, better than the initial estimate of 1.2% in May. The improvement was attributed to stronger consumer spending and an increase in exports. Earlier in the year, the markets were braced for a very poor quarter, with the first estimate in April projecting a gain of only 0.7%. Inflation remains stubbornly low, and consumer spending is also soft, despite high consumer confidence levels. In May, Personal Spending softened to 0.1%, down from 0.4% a month earlier. If inflation levels don’t show some improvement, the Federal Reserve may have second thoughts about a December rate hike.

XAU/USD Fundamentals

Monday (July 3)

• 9:45 US Final Manufacturing PMI. Estimate 52.1. Actual 52.0
• 10:00 US ISM Manufacturing PMI. Estimate 55.0. Actual 57.8
• 10:00 ISM Construction Spending. Estimate 0.3%. Actual 0.0%
• 10:00 ISM Manufacturing PMI. Estimate 58.5. Actual 55.0
• All Day – US Total Vehicle Sales. Actual 16.5M

*All release times are EDT

*Key events are in bold

XAU/USD for Monday, July 3, 2017

XAU/USD July 3 at 13:00 EST

Open: 1242.19 High: 1242.83 Low: 1220.94 Close: 1222.08

XAU/USD Technical

• XAU/USD lost ground in the Asian session and recorded further losses in the European session. The pair continues to drop in North American trade
• 11199 is providing support
• 1232 is a weak resistance line
• Current range: 1199 to 1232

Further levels in both directions:

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

OANDA’s Open Positions Ratio

In the Monday session, XAU/USD ratio long positions have a majority (70%), indicative of XAU/USD reversing directions and climbing to higher levels. 

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