Gold Slips as Investors Shrug Off Soft Durable Reports

Gold has posted losses to kick off the new trading week. Spot gold is down 1% on the day, as the metal trades at $1244.27 per ounce in the North American session. In economic news, In the US, durable goods orders missed expectations, disappointing the markets. Core Durable Goods came in at 0.1%, missing the forecast of 0.4%. Durable Goods Orders declined 1.1%, short of the forecast of -0.5%. On Tuesday, we’ll get a look at CB Consumer Confidence and Fed Chair Janet Yellen will speak at an event in London.

Although the US started off the week with soft durables data, risk appetite remains high, and this has sent gold prices lower on Monday. 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, 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.

There was positive news last week from the US construction industry. On Friday, New Home Sales jumped to 610 thousand, above the forecast of 599 thousand. Earlier in the week, Existing Home Sales improved to 5.62 million, beating the estimate of 5.54 million. There had been concerns about construction numbers, as Building Permits and Housing Starts both missed expectations in the May releases. Later in the week, the economy receives a report card, with the release of Final GDP for the first quarter. Preliminary GDP, which was released in May, came in at 1.2%, and this is the forecast for Final GDP. Will weak inflation and consumer spending result in a weaker than expected GDP report? If so, the US dollar could be a casualty and lose ground against its rivals.

Gold Weighed Down By Return of Risk Appetite

XAU/USD Fundamentals

Monday (June 26)

• 8:30 US Core Durable Goods Orders. Estimate 0.4%. Actual 0.1%
• 8:30 US Durable Goods Orders. Estimate -0.5%. Actual -1.1%

Tuesday (June 27)

• 10:00 US CB Consumer Confidence. Estimate 116.2
• 13:00 US Federal Chair Janet Yellen Speaks

*All release times are EDT

*Key events are in bold

XAU/USD for Monday, June 26, 2017

XAU/USD June 26 at 13:15 EST

Open: 1256.75 High: 1258.27 Low: 1236.01 Close: 1244.27

XAU/USD Technical

• XAU/USD was flat in the Asian session. The pair posted considerable losses in European trade and has edged higher 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

In the Monday session, XAU/USD ratio is showing long positions with a majority (68%). This is indicative of XAU/USD reversing directions and climbing to higher levels. 

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