Gold steady, investors eye Fed minutes

Gold is showing limited movement in Thursday session, ahead of the release of the Federal Reserve minutes. In the North American session, the spot price for one ounce of gold is $1256.29, up 0.04% on the day. On the economic front, employment data is in the spotlight. ADP nonfarm payrolls ticked lower, coming in at 177 thousand. This was well short of the estimate of 190 thousand. Unemployment Claims climbed to 231 thousand, higher than the estimate of 225 thousand. The ISM Non-Manufacturing PMI improved to 59.1, beating the estimate of 58.5 points. This marked a 4-month high. Later in the day, the FOMC will release the minutes of the June policy meeting. On Friday, the U.S releases official nonfarm payrolls and wage growth.

The markets were off for the Fourth of July holiday and we could see some volatility from gold during the remainder of the week. All eyes are on the upcoming release of the Fed minutes from the June meeting. At the meeting, policymakers raised the benchmark rate for a second time this year. Gold prices are sensitive to interest rate moves, so any news from the Federal Reserve can have a significant impact on gold. Traders should be prepared for some movement from gold prices, depending on the hawkishness of the minutes. Fed members are split on whether the central bank should raise rates two or three times in the second half of 2018. The impressive performance of the U.S economy makes a strong case for four hikes, but the Fed is uneasy about escalating trade tensions as a result of President Trump slapping tariffs on major U.S trading partners. On Friday, the U.S releases key employment numbers, and if the indicators beat expectations, gold prices could lose ground.

Gold has steadied this week, after recording three consecutive losing weeks. During this time, gold prices have slipped 3.5% against the strong U.S dollar. Although escalating trade tensions, triggered by tariffs and counter-tariffs, have weighed on equity markets, safe-haven gold has been unable to make any headway against the greenback. At the same time, if a full-blown trade war develops between the U.S and China, this could trigger a global recession, which could see nervous investors dump equities and flock to safe-haven assets like gold.

XAU/USD Fundamentals

Thursday (July 5)

• 7:30 US Challenger Job Cuts. Actual 19.6%
• 8:15 US ADP Nonfarm Employment Change. Estimate 190K. Actual 177K
• 8:30 US Unemployment Claims. Estimate 225K. Actual 231K
• 9:45 US Final Services. Estimate 56.5. Actual 56.5
• 10:00 US ISM Non-Manufacturing PMI. Estimate 58.3. Actual 59.1
• 11:00 US Crude Oil Inventories. Estimate -4.4M. Actual 1.2M
• 14:00 US FOMC Meeting Minutes

*All release times are DST

*Key events are in bold

XAU/USD for Thursday, July 5, 2018

XAU/USD July 5 at 13:05 DST

Open: 1256.91 High: 1259.81 Low: 1251.38 Close: 1257.04

XAU/USD Technical

XAU/USD edged lower in the Asian session. In European trade, the pair moved lower but then recovered these gains. XAU/USD is showing little movement in the North American session

• 1236 is providing support
• 1260 is a weak resistance line
• Current range: 1236 to 1260

Further levels in both directions:

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

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