Gold slips as U.S inflation, personal spending reports beat forecasts

Gold prices have started the week with losses. In Monday’s North American trade, the spot price for one ounce of gold is $1230.07, down 0.34% on the day. In the U.S, there are no major releases, but the focus was on consumer numbers. Core PCE Price Index gained 0.2%, edging above the estimate of 0.1%. Personal spending edged up to 0.4%, matching the forecast. However, personal income dipped to 0.2%, its lowest level since August 2017. On Tuesday, the U.S releases CB consumer confidence.

Gold has posted four straight weekly gains, and the metal has posted strong gains of 3.2% in October. A black October for the stock markets has badly shaken investor confidence, and safe-haven gold has acted as a magnet for jittery investors. At the forefront of geopolitical tensions is the trade war between the U.S and its major partners, particularly with China. Tensions between the two largest economies show no signs of easing, and the Trump administration continues to threaten further severe tariffs on China.

Last week ended on a high note, as Advance GDP posted an impressive gain of 3.5%, above the estimate of 3.3%. Although the gain of 3.5% certainly represents a brisk pace of expansion, it was well below the sizzling Final GDP for Q2, which came in at 4.2%. The downward trend could continue as we move into the fourth quarter. On Monday, the Atlanta Fed released its well-respected GDP forecast, which predicted growth of just 2.6% in the fourth quarter. If Q4 growth does fall below the 3-percent threshold, the Federal Reserve would have to rethink its plans for three rate hikes in 2019 and that could put pressure on the U.S dollar.

XAU/USD Fundamentals

Monday (October 29)

• 8:30 US Core PCE Price Index. Estimate 0.1%. Actual 0.2%
• 8:30 US Personal Spending. Estimate 0.4%. Actual 0.2%
• 8:30 US Personal Income. Estimate 0.4%. Actual 0.4%
• Tentative – US Loan Officer Survey

Tuesday (October 30)

• 10:00 US CB Consumer Confidence. Estimate 136.3

*All release times are DST

*Key events are in bold

XAU/USD for Monday, October 29, 2018

XAU/USD October 29 at 12:05 DST

Open: 1233.90 High: 1235.47 Low: 1227.73 Close: 1230.07

XAU/USD Technical

XAU/USD edged higher in the Asian session but gave up these gains. The pair edged lower in European trade and this trend continues in the North American session

• 1220 is providing support
• 1236 was tested earlier in resistance
• Current range: 1220 to 1236

Further levels in both directions:

• Below: 1220, 1204, 1170 and 1146
• Above: 1236, 1261 and 1284

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