Gold Slips As U.S. Dollar Selloff Hits The Brakes

 | Jan 30, 2018 12:04AM ET

Gold has started the week posting losses. In Monday’s North American trading, the spot price for an ounce of gold was $1341.32, down 0.62% on the day.

January has been good to gold, with the metal climbing 2.8% during the month. Gold prices touched $1366 last week, the highest level since August 2017.

The US dollar selloff was in full flight on Wednesday, as the greenback tumbled against both gold and other major currencies following comments from U.S. Treasury Secretary Steven Mnuchin. Speaking in Davos, Mnuchin said that the country was comfortable with a low dollar. This in turn drew a rebuke from ECB President Mario Draghi, who accused the U.S. administration of being strategic with the exchange rate. Mnuchin later backtracked, claiming that his remarks had been taken out of context and that he was in favor of a stronger dollar.

In the U.S., fourth-quarter GDP forecasts had recently pointed to strong growth of 3% or higher. This resulted in some disappointment on Friday, as Advance GDP came in at 2.6%. The economy grew 2.3% in 2017, compared to 1.6% in 2016. Growth in Q4 was affected by stronger consumer spending, which led to a surge in imports. The increase in consumer spending also boosted inflation, as the personal consumption expenditures index, which the Fed prefers to use, unveiled a 1.9% surge in Q4 on Monday, up from a 1.3% rise in Q3. A strong economic trend has mainly favoured the manufacturing sector, as durable goods orders hit 2.9% in December, crushing the estimate of 0.6%. This was the highest gain in six months, and helped make 2017 a banner year: the indicator increased an aggregate 5.8%, marking the sharpest yearly expansion since 2011.

On the release front, personal spending slowed to 0.4%, shy of the 0.6% estimates. On Tuesday, the key indicator is the CB Consumer Confidence, while U.S President Donald Trump will deliver the closely-watched State of the Union address.

XAU/USD Fundamentals

Monday (January 29)

  • 8:30 US Core PCE Price Index. Estimate 0.2%. Actual 0.2%
  • 8:30 US Personal Spending. Estimate 0.5%. Actual 0.4%
  • 8:30 US Personal Income. Estimate 0.3%. Actual 0.4%

Tuesday (January 30)

  • 10:00 US CB Consumer Confidence. Estimate 123.2
  • 21:00 President Trump Speaks

*All release times are GMT

*Key events are in bold

XAU/USD for Monday, January 29, 2018