Gold gains ground in thin holiday trade, FOMC minutes next

Gold has posted gains in the Wednesday session and is currently trading at a 1-week high. In the North American session, the spot price for one ounce of gold is $1256.29, up 0.32% on the day. There are no U.S events on the Fourth of July holiday. On Thursday, the U.S will releases ADP nonfarm payrolls, unemployment claims and the FOMC minutes of the June policy meeting.

Gold has steadied this week, after recording three consecutive losing weeks. During this time, gold prices have slipped 3.5% against the strong U.S dollar. Although escalating trade tensions, triggered by tariffs and counter-tariffs, have weighed on equity markets, safe-haven gold has been unable to make any headway against the greenback. At the same time, if a full-blown trade war develops between the U.S and China, this could trigger a global recession, which could see nervous investors dump equities and flock to safe-haven assets like gold.

Gold prices are sensitive to interest rate moves, so any news from the Federal Reserve can have a significant impact on gold. The Fed will release the minutes of the June meeting, which saw the Fed raise rates for the second time this year. Traders should be prepared for some movement from gold prices, depending on the hawkishness of the minutes. Fed members are split on whether the central bank should raise rates two or three times in the second half of 2018. The impressive performance of the U.S economy makes a strong case for four hikes, but the Fed is uneasy about escalating trade tensions as a result of President Trump slapping tariffs on major U.S trading partners.

 

XAU/USD Fundamentals

Wednesday (July 4)

  • There are no U.S events

Thursday (July 5)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 190K
  • 8:30 US Unemployment Claims. Estimate 231K
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 58.3
  • 14:00 US FOMC Meeting Minutes

*All release times are DST

*Key events are in bold

 

XAU/USD for Wednesday, July 4, 2018

XAU/USD July 4 at 11:50 DST

Open: 1252.26 High: 1261.17 Low: 1252.17 Close: 1256.29

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1204 1220 1236 1260 1285 1307

XAU/USD posted gains in the Asian session. In European trade, the pair moved higher but gave up these gains. XAU/USD is flat in the North American session

  • 1236 is providing support
  • 1260 is the next resistance line
  • Current range: 1236 to 1260

Further levels in both directions:

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