Gold Shrugs Off Strong Housing Report

Gold is showing limited movement at the start of the week. In North American trade, spot gold is trading at $1268.50, down 0.08% on the day. On the release front, Pending Home Sales posted a gain of 1.6% in June, beating the forecast of 0.9%. On Tuesday, the US publishes Personal Spending and the ISM Manufacturing PMI.

US Advance GDP impressed in the second quarter with a strong gain of 2.6%, beating the estimate of 2.5%. The economy was boosted by strong consumer spending and business investment, as fears of a second straight quarter of weak growth proved unfounded. Still, inflation remains weak, and wage growth fell in Q2 despite a robust labor market and an unemployment rate of just 4.4%. Investors are skeptical that the Fed will press the rate trigger in December due to low inflation. The odds of a December increase are at 42%, compared to 50% a month ago, according to the CME Group.

The US dollar has posted broad losses in response to climbing political risk in the US and investors have snapped up gold, a traditional safe haven asset, in response. Gold has reeled off three consecutive weekly gains. There was more angst for the White House on Friday, as President Trump’s struggling healthcare bill gasped its final breath as the bill was defeated in the Senate after three Republican lawmakers joined the Democrats and voted against the bill. This is another setback for President Trump, who has been unable to get Congress to pass any significant legislation, despite the Republicans controlling both the House and the Senate. Trump will now be able to focus on other issues such as tax reform, but investors are skeptical as to whether the President will have the support he needs in Congress to pass major legislation.

USD/XAU Fundamentals

Monday (July 31)

• 9:45 US Chicago PMI. Estimate 60.8. Actual 58.9
• 10:00 US Pending Home Sales. Estimate 0.9%. Actual 1.5%

Tuesday (August 1)

• 8:30 US Personal Spending. Estimate 0.1%
• 10:00 US ISM Manufacturing PMI. Estimate 56.4

*All release times are EDT

*Key events are in boldXAU/USD for Monday, July 31, 2017

XAU/USD July 31 at 12:35 EST

Open: 1269.56 High: 1271.23 Low: 1265.88 Close: 1268.50

XAU/USD Technical

• XAU/USD has shown limited movement throughout the Monday session
• 1260 is providing support
• 1285 is the next resistance line
• Current range: 1260 to 1285

Further levels in both directions:

• Below: 1260, 1232, 1199 and 1170
• Above: 1285, 1307 and 1337

OANDA’s Open Positions Ratio

In the Monday session, XAU/USD ratio is showing long positions with a majority (64%), indicative of XAU/USD reversing directions and moving higher.

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