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Gold under pressure as trade talks continue

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Gold has steadied in the Friday session, after sustaining sharp losses on Thursday. In North American trade, the spot price for one ounce of gold is $1326.27, up 0.22% on the day. There are no data releases out of the U.S., so we could see an uneventful North American session.

Gold tumbled on Thursday, following reports that progress was being made in negotiations between the U.S. and China. The sides have been meeting this week in Washington for a fourth round of talks, and negotiators are preparing memorandums of understanding on key issues such as cyber theft and intellectual property rights. Investors are hopeful that a March 1 deadline of higher U.S tariffs can be avoided. The trade war between the two countries has weighed heavily on global growth, and a breakthrough in the talks would boost risk appetite and likely weigh on gold, a traditional safe-haven asset.

The Federal Reserve minutes from the January meeting reiterated that policymakers remain dovish with regard to monetary policy. Participants reiterated that the Fed will remain cautious, stating that a “patient approach to monetary policy” was appropriate. However, members added that if economic projections improved, the Fed could revise the “patient approach”. The minutes noted that the employment market had strengthened and economic activity was rising, but expected GDP in 2019 to slow down compared to 2018. We may not see a rate hike before the second half of the year, as the Fed has scaled back its forecast to two hikes this year, while the markets have priced in no rates hikes until 2020.

Markets flat on final day of the week

U.S dollar stronger by default, but for how long?

XAU/USD Fundamentals

Friday (February 22)

  • 10:15 US FOMC Member Williams Speaks
  • Tentative – Fed Monetary Policy Report
  • 12:00 US FOMC Member Clarida Speaks
  • 13:30 US FOMC Member Bullard Speaks
  • 13:30 US FOMC Member Quarles Speaks
  • 17:30 US FOMC Member Williams Speaks

*All release times are EST

*Key events are in bold

XAU/USD for Friday, February 22, 2019

XAU/USD February 22 at 15:15 EST

Open: 1323.36 High: 1327.01 Low: 1321.69 Close: 1326.27

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1261 1284 1306 1326 1344 1365

XAU/USD was mostly flat in the Asian session and has edged higher in European trade

  • 1306 is providing support
  • 1326 is the next resistance line
  • Current range: 1306 to 1326

Further levels in both directions:

  • Below: 1306, 1284 and 1261
  • Above: 1326, 1344, 1365 and 1392

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