XAU/USD – Gold Edges Lower, Trump Takes Aim at TPP, NAFTA

Gold prices have edged lower in the Tuesday session. In North American session, the spot price for one ounce is $1213.42. On the release front, US Existing Home Sales fell to 5.49 million, short of the forecast of 5.55 million. The Richmond Manufacturing Index improved to 12 points, well above the estimate of 7 points.

Gold endured a dreadful fourth quarter, plunging 12.1 percent. However, gold has rebounded impressively in 2017, jumping 5.7 percent in January. The economy is in fine form and if strong growth continues, we could see additional rate hikes from the Federal Reserve, which would be bearish for gold prices. At the same time, uncertainty and unease surrounding Trump’s economic plans could take the wind out of the markets and push gold prices higher.

Donald Trump has barely warmed his new chair in the Oval Office, but dramatic change is already underway. On Monday, Trump signed an executive order formally withdrawing the US from the Trans-Pacific Partnership, a broad trade agreement which the US had signed but not ratified. Trump had promised to leave the TPP during the election, arguing that the deal would hurt American workers. Next stop is NAFTA, which Trump has said he will renegotiate with Canada and Mexico. Trump has taken a tough line on US companies that have moved production outside of the US and has threatened to impose tariffs on companies that move production to Mexico. Predictably, these protectionist measures are raising concerns in the markets that the US economic growth could drop if the US takes an isolationist stance towards global trade, and such a stance would likely weigh on the US dollar and send gold prices upwards. US trade partners could choose to retaliate against Trump’s moves, igniting a trade war in which there are no winners.

After U.S Exit, Asian Nations Try to Save TPP

XAU/USD Fundamentals

Tuesday (January 24)

• 9:45 US Flash Manufacturing PMI. Estimate 54.6. Actual 55.1
• 10:00 US Existing Home Sales. Estimate 5.54M. Actual 5.49M
• 10:00 US Richmond Manufacturing Index. Estimate 7. Actual 12

*All release times are EST

*Key events are in bold

XAU/USD for Tuesday, January 24, 2017

XAU/USD January 24 at 13:15 EST

Open: 1217.31 High: 1218.59 Low: 1211.54 Close: 1213.42

XAU/USD Technical

• XAU/USD was flat in the Asian session. The pair posted slight losses in European trade and has shown limited movement in the North American session
• 1199 is providing support
• 1232 is the next resistance line
• Current range: 1199 to 1232

Further levels in both directions:

• Below: 1199, 1174, 1146 and 1130
• Above: 1232, 1260 and 1285

OANDA’s Open Positions Ratio

In the Tuesday session, XAU/USD ratio is showing little movement. Long positions have a strong majority (69%), indicative of trader bias towards XAU/USD reversing directions and climbing to higher levels.

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