Gold Continues to Trade Sideways as Syria Tensions Ease

Gold is unchanged for a second straight day. In Tuesday’s North American session, the spot price for an ounce of gold is $1345.50, up 0.05% on the day. In economic news, US construction numbers beat expectations. Building Permits improved to 1.35 million, beating the forecast of 1.33 million. Housing Starts climbed to 1.32 million, above the estimate of 1.27 million.

Gold prices have steadied this week, after last week’s roller-coaster ride. The volatility has been closely connected to escalating tensions over a chemical attack by the Syrian government on rebel positions. There was uncertainty throughout last week about whether the US would respond, but the markets have settled down since a US-led strike hit Syrian weapon centers on the weekend. Investor risk appetite has improved, but concerns that tensions could quickly reignite have meant that investors are not dumping gold holdings in favor of riskier assets just yet. After the weekend attack, President Trump declaration of “mission accomplished” means that things will remain relatively quiet in Syria. However, further chemical attacks by the Syrian regime could trigger a response from the US and its allies, which could result in volatility in the markets, similar to what occurred last week.

The recent trade battle between the US and China has been overshadowed by events in Syria, but the threat of further tariffs between the world’s largest two economies could again roil the markets and in turn, send gold prices higher. Another salvo was fired on Tuesday, as China slapped a tariff of some 179% on US sorghum crops, which is a livestock feed. China imports about $1 billion of sorghum annually, and the tariff, if it remains in place, will essentially halt US exports of sorghum to China. The Chinese government has threatened to impose tariffs on US soybean exports, valued at some $12 billion each year. If the US opts to retaliate, the specter of an ugly trade war between the US and China could spook investors and send gold to higher levels.

XAU/USD Fundamentals

• 8:30 US Building Permits. Estimate 1.33M. Actual 1.35M
• 8:30 US Housing Starts. Estimate 1.27M. Actual 1.32M
• 9:15 US Capacity Utilization Rate. Estimate 77.9%. Actual 78.0%
• 9:15 US FOMC Member John Williams Speaks
• 9:15 US Industrial Production. Estimate 0.3%. Actual 0.5%
• 10:00 US FOMC Member Randal Quarles Speaks
• 17:40 US FOMC Rafael Bostic Speaks

*All release times are DST

*Key events are in bold

XAU/USD for Tuesday, April 17, 2018

XAU/USD April 17 at 13:10 DST

Open: 1345.88 High: 1349.45 Low: 1337.71 Close: 1346.54

XAU/USD Technical

• XAU/USD was flat in the Asian session. The pair lost ground in European trade but has recovered in the North American session
• 1337 is providing support
• 1375 is the next resistance line
• Current range: 1337 to 1375

Further levels in both directions:

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

OANDA’s Open Positions Ratio

In the Tuesday session, XAU/USD ratio is showing short positions with a majority (53%). This is indicative of trader bias towards XAU/USD breaking out and heading lower.

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.