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Gold gains ground as markets cast nervous eye on G-20

Gold is considerably higher in the Wednesday session, recovering most of the losses sustained on Tuesday. In North American trade, the spot price for one ounce of gold is $1221.80, up 0.56% on the day. In economic news, Wednesday’s key event was Preliminary GDP, which gained 3.5% in Q3, just shy of the estimate of 3.6%.  On Thursday, there are three key releases in the U.S. – Core PCE Price Index, personal spending and unemployment claims. As well, the FOMC releases the minutes of its November policy meeting.

The U.S. economy grew 3.5% in the third quarter, as GDP remained unrevised from the first estimate in October. This is considerably slower than the sizzling 4.2% gain in the second quarter, but still points to a strong economy. However, there is concern that slower growth will translate into a scaling back of interest rate hikes, which would be bearish for the U.S. dollar but good news for gold prices. The minutes of the November meeting will be released on Thursday, when the Federal Reserve left rates unchanged. A rate hike is widely expected in December, but heady talk of “a hike each quarter” in 2019 has dissipated, as the global trade war continues and the red-hot U.S. economy shows signs of slowing down. Analysts are now forecasting two or three rate hikes next year.

Investors will be keeping a close eye on the G-20 summit in Argentina later this week. President Trump will meet with Chinese President Xi Jinping, and the stakes could not be higher, given the full-blown trade war between the world’s two largest economies. President Trump has taken a tough line ahead of the summit, threatening to raise the tariffs from 10 percent to 25 percent on $250 billion worth of Chinese goods. If Trump makes good on his threat, we could see sharp volatility in the currency markets, with the U.S dollar likely making sharp gains. However, the unpredictable Trump is known to prefer to reach a deal whenever possible, so his sharp rhetoric could be some grandstanding ahead of his crucial meeting with Xi. If the two leaders can “agree to disagree” and continue talking, investors will breathe a deep sigh of relief.

XAU/USD Fundamentals

Wednesday (November 28)

  • 8:30 US Preliminary GDP. Estimate 3.6%. Actual 3.5%
  • 8:30 US Goods Trade Balance. Estimate -76.7B. Actual -77.2B
  • 8:30 US Preliminary GDP Price Index. Estimate 1.7%. Actual 1.7%
  • 8:30 US Preliminary Wholesale Inventories. Estimate 0.5%. Actual 0.7%
  • 10:00 US New Home Sales. Estimate 583K. Actual 544K
  • 10:00 US Richmond Manufacturing Index. Estimate 16. Actual 14
  • 10:30 US Crude Oil Inventories. Estimate 0.6M. Actual 
  • 12:00 US Fed Chair Powell Speaks

Thursday (November 29)

  • 8:30 US Core PCE Price Index. Estimate 0.2%
  • 8:30 US Personal Spending. Estimate 0.4%
  • 8:30 US Unemployment Claims. Estimate 221K
  • 10:00 US Pending Home Sales. Estimate 0.8%
  • 14:00 US FOMC Meeting Minutes

*All release times are EST

*Key events are in bold

 

XAU/USD for Wednesday, November 28, 2018

XAU/USD November 28 at 12:55 EST

Open: 1215.03 High: 1226.39 Low: 1211.28 Close: 1221.80

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1146 1170 1204 1220 1236 1261

XAU/USD was flat in the Asian and European sessions. The pair has posted gains in North American trade

  • 1204 is providing support
  • 1220 is under pressure in resistance
  • Current range: 1204 to 1220

Further levels in both directions:

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

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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