Gold drops to 2018 low as trade war fears boost Greenback

Gold is under pressure in the Tuesday session. In North American trade, the spot price for one ounce of gold is $1275.69, down 0.22% on the day. Earlier in the day, gold dropped to $1270, its lowest level since December. On the release front, construction indicators were a mix. Building Permits dropped to 1.30 million, shy of the estimate of 1.35 million. This marked a 3-month low. Housing Starts improved to 1.35 million, beating the estimate of 1.31 million. On Wednesday, Federal Reserve Chair Jerome Powell will participate in a panel at the European Forum in Sintra, Portugal. The U.S will release Existing Home Sales.

In times of crisis, nervous investors often turn to gold, a safe-haven asset. However, since the start of the new round of tit-for tat tariffs between China and the U.S began on Friday, gold has defied expectations and lost ground. The base metal has declined 1.9% since Friday. The U.S dollar has posted broad gains against other major currencies and has also moved higher against gold.

President Trump has raised the stakes in the escalating trade spat between the world’s two largest economies. After China said it would match the U.S move to slap tariffs on $50 billion in Chinese goods, Trump sent shock waves across global markets on Tuesday, threatening to impose 10 percent tariffs on some $200 billion in Chinese goods. Not surprisingly, China has threatened to retaliate against this latest move. Trump has vowed to take action on the $375 billion trade deficit that the U.S has with China, claiming that the latter is guilty of unfair trade practices. With the first of the U.S tariffs scheduled to take effect on July 6 and no signs that either side will blink first, there is a real danger of a global trade war, which could end up a lose-lose situation for both China and the United States.

XAU/USD Fundamentals

Tuesday (June 19)

• 8:30 US Building Permits. Estimate 1.35M. Actual 1.30M
• 8:30 US Housing Starts. Estimate 1.31M. Actual 1.35M

Wednesday (June 20)

• 6:00 British CBI Industrial Order Expectations. Estimate 1
• 8:30 US Current Account. Estimate -129B
• 9:30 Fed Chair Powell Speaks
• 10:00 US Existing Home Sales. Estimate 5.55M

*All release times are DST

*Key events are in bold

XAU/USD for Tuesday, June 19, 2018

XAU/USD June 18 at 12:35 DST

Open: 1278.36 High: 1284.10 Low: 1270.53 Close: 1274.96

XAU/USD Technical

XAU/USD posted slight gains in the Asian sessions but then reversed directions and headed downwards in the European session. The pair has posted small gains in North American trade

• 1260 is providing support
• 1285 is the next resistance line
• Current range: 1260 to 1285

Further levels in both directions:

• Below: 1260, 1236, 1220 and 1204
• Above: 1285, 1307, 1322 and 1337

Content 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 Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.