Gold Unchanged as Trump Speech Underwhelms Markets

Gold is almost unchanged in the Wednesday session. In North American trade, the spot price for one ounce is $1245.89. On the release front, key indicators were mixed. Personal Spending slipped to 0.2%, shy of the forecast of 0.3%. In the US, ISM Manufacturing PMI improved to 57.7, marking a sixth straight month that the index has risen higher.

Gold prices dipped on Tuesday, thanks to hawkish statements from Federal Reserve policymakers. On Tuesday, FOMC members William Dudley and John Williams both hinted at an imminent hike by the Fed, which has raised the odds of a March hike at 66%, according to Reuters. Dudley said the case for a hike is compelling, while Williams noted that a rate increase will be up for “serious consideration” at the March policy meeting. The markets will be listening closely to speeches from other FOMC members this week, culminating in speeches from Janet Yellen and Fed Governor Stanley Fischer on Friday.

There was a great deal of anticipation ahead of President Trump’s maiden speech to Congress on Tuesday. In the end, however, the speech was short on specifics and the markets haven’t shown much reaction in the Wednesday session. Trump promised “massive” tax relief for the middle class as well as corporate tax cuts. However, he failed to provide details or even timelines on tax reform or infrastructure spending, two themes which he has discussed since the election campaign. Trump stated that he will ask Congress to approve legislation for $1 trillion in infrastructure spending, “financed through both public and private capital”. Analysts noted that although Trump touched on the protectionist theme, such as the trade imbalance with China, his tone was less belligerent than we’ve seen in the past.

XAU/USD Fundamentals

Wednesday (March 1)

• 8:30 US Core PCE Price Index. Estimate 0.3%. Actual 0.3%
• 8:30 US Personal Spending. Estimate 0.3%. Actual 0.2%
• 8:30 US Personal Income. Estimate 0.3%. Actual 0.4%
• 9:45 US Final Manufacturing PMI. Actual 54.4
• 10:00 US ISM Manufacturing PMI. Estimate 56.2. Actual 57.7
• 10:00 US Construction Spending. Estimate 0.7%. Actual -1.0%
• 10:00 US ISM Manufacturing Prices. Estimate 68.5. Actual 68.0
• 10:30 US Crude Oil Inventories. Estimate 1.5M. Actual 1.5M
• All Day – US Total Vehicle Sales. Estimate 17.7M
• 13:00 US FOMC Member Robert Kaplan Speech
• 14:00 US Beige Book
• 18:00 US FOMC Member Lael Brainard Speech

Upcoming Key Events

Thursday (March 2)

• 8:30 US Unemployment Claims. Estimate 243K

*All release times are GMT

*Key events are in bold

XAU/USD for Wednesday, March 1, 2017

XAU/USD March 1 at 13:00 EST

Open: 1245.96 High: 1248.54 Low: 1236.88 Close: 1245.89

XAU/USD Technical

• XAU/USD was flat in the Asian session. The pair posted small losses in European trade but has recovered in the North American session
• 1232 is providing support
• 1260 is the next resistance line
• Current range: 1232 to 1260

Further levels in both directions:

• Below: 1232, 1199, 1174 and 1146
• Above: 1260, 1285 and 1307

OANDA’s Open Positions Ratio

XAU/USD ratio is showing gains towards long positions. Currently, long positions have a majority (61%), indicative of trader bias towards XAU/USD breaking out and moving upwards.

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