Gold’s Downward Spiral Continues

Gold prices continue to head south, as the base metal has recorded losses in five of the past six sessions. In Thursday’s North American trade, the spot price for an ounce of gold is $1317.27, down 0.42% on the day. On the release front, durable goods orders reports were mixed. Core Durable Goods Orders fell to 0.0%, missing the estimate of 0.5%. There was better news from Durable Goods Orders jumped 2.6%, crushing the estimate of 1.6%. Unemployment Claims dropped to 209 thousand, well below the estimate of 230 thousand. On Friday, the US releases Advance GDP for the first quarter, with a forecast of 2.0%. This is considerably lower than Final GDP in Q4, which came in at a strong 2.9%. We’ll also get a look at UoM Consumer Sentiment, which is expected to drop to 98.0 points. Traders should be prepared for some movement from gold during the North American session on Friday.

The US dollar continues to shine, and gold has dropped to its lowest level since March 21. Much of the dollar rally can be attributed to rising yields on US bonds, which have hit 4-year highs this week. On Wednesday, 10-year US Treasury notes climbed to 3.015%, and 2-year bonds have increased to 2.504 percent. With inflation appearing to be on the rise, there are stronger expectations that the Federal Reserve will raise rates four times in 2018, which is good news for the US dollar. With oil pushing above $70 a barrel, there are concerns that inflation will rise, which has pushed bond prices lower and yields upwards. At the same time, investor risk appetite has improved, with an easing of tensions between North and South Korea. A historic meeting between the leaders of the two countries is expected shortly, and there is even talk of a peace treaty being signed between the two countries.

XAU/USD Fundamentals

Thursday (April 26)

• 8:30 US Core Durable Goods Orders. Estimate 0.5%. Actual 0.0%
• 8:30 US Durable Goods Orders. Estimate 1.6%. Actual 2.6%
• 8:30 US Unemployment Claims. Estimate 230K. Actual 209K
• 8:30 US Goods Trade Balance. Estimate -74.8B. Actual -68.0B
• 8:30 US Preliminary Wholesale Inventories. Estimate 0.6%. Actual 0.5%
• 10:30 US Natural Gas Storage. Estimate -11B. Actual -18B

 Friday (April 27)

• 8:30 US Advance GDP. Estimate 2.0%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 98.0

*All release times are DST

*Key events are in bold

XAU/USD for Thursday, April 26, 2018

XAU/USD April 25 at 12:35 DST

Open: 1322.88 High: 1326.71 Low: 1315.29 Close: 1317.23

XAU/USD Technical

• XAU/USD showed little movement in the Asian and European sessions. The pair has posted losses in North American trade
• 1307 is providing support
• 1337 is the next resistance line
• Current range: 1307 to 1337

Further levels in both directions:

• Below: 1307, 1285 and 1260
• Above: 1337, 1375, 1416 and 1433

OANDA’s Open Positions Ratio

XAU/USD ratio is showing little movement in the Thursday session. Currently, long positions have a majority (59%), indicative of trader bias towards XAU/USD reversing directions and moving upwards.  

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.