Gold slips to 13-month low, Powell testimony next

Gold has posted sharp losses in the Tuesday session. In North American trade, the spot price for one ounce of gold is $1231.77, down 0.20% on the day. On the release front, Industrial Production rebounded in June with a gain of 0.6%, after a decline of 0.1% in May. Later in the day, the U.S releases a housing report. All eyes are on Jerome Powell, as the Federal Reserve chair testifies before the Senate Banking Committee.

Gold has resumed its downward movement. Earlier on Tuesday, gold prices slipped to $1266, its lowest level since June 2017. Solid consumer spending numbers on Monday are weighing on the metal. After a soft first quarter, U.S retail sales reports have rebounded in the second quarter. Core retail sales were revised upwards to 0.8% in May, and the June gain of 0.5% edged above the forecast of 0.4%. Retail sales gained 0.4%, and were up an impressive 6.6% on an annualized basis. Consumer spending is a key driver of economic growth, and a tight labor markets and firming inflation are further indications that the economy is in excellent shape. The Fed is widely expected to raise rates again at the September meeting, with odds of a quarter-point hike at 87%, according to the CME Group.

The trade war between the U.S and China is raising concerns not just on the equity markets but at the Federal Reserve as well. On Friday, Dallas Fed President Robert Kaplan said he would have to downgrade his economic outlook for the economy if the tariff battle continues. Kaplan said that U.S tariffs on steel and aluminum imports had dampened capital expenditures plans and further trade tensions could lead to currency fluctuations and geopolitical instability.

  Commodities Weekly: Oil tumbles on supply/demand dynamics

Monday blues or Dog days of summer

XAU/USD Fundamentals

Tuesday (July 17)

  • 9:15 US Capacity Utilization Rate. Estimate 78.4%. Actual 78.0%
  • 9:15 US Industrial Production. Estimate 0.5%. Actual 0.6%
  • 10:00 US Federal Reserve Jerome Powell Testifies
  • 10:00 US NAHB Housing Market Index. Estimate 69. Actual 68
  • 16:00 US TIC Long-Term Purchases. Estimate 34.3B

Wednesday (July 18)

  • 8:30 US Building Permits. Estimate 1.33M
  • 8:30 US Housing Starts.  Estimate 1.32M
  • 10:00 US Federal Reserve Jerome Powell Testifies
  • 10:30 US Crude Oil Inventories
  • 14:00 US Beige Book

*All release times are DST

*Key events are in bold

XAU/USD for Tuesday, July 17 2018

XAU/USD July 16 at 10:00 DST

Open: 1241.07 High: 1245.10 Low: 1230.59 Close: 1231.77

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1170 1204 1220 1236 1260 1285

XAU/USD was flat in the Asian session. The pair showed limited movement in European trade and has posted strong losses in North American trade

  • 1220 is providing support
  • 1236 has switched to a resistance role after losses by XAU/USD on Tuesday
  • Current range: 1220 to 1236

Further levels in both directions:

  • Below: 1220, 1204 and 1170
  • Above: 1236, 1260, 1285, 1307 and 1322