Gold edges higher, Brexit vote looms

Gold has edged higher in Tuesday trading, erasing the losses seen on Monday. In the North American session, the spot price for one ounce of gold is $1297.81, up 0.33% on the day. In the U.S., Core CPI edged down to 0.1%, shy of the estimate of 0.2%. CPI remained steady at 0.2%. Wednesday promises to be busy, as the U.S. publishes PPI and durable goods orders data.

U.S. consumer inflation remains well below the Federal Reserve’s target of 2.0 percent, so there is little pressure on the Fed to raise rates anytime soon. Policymakers have been signaling that the Fed could stay on the sidelines until the second half of 2019, and this stance was underscored by Fed Chair Powell, in a television interview on Sunday. Powell left no doubt about where the Fed stands, saying that the Fed would remain patient and was in no hurry to change interest rate policy. The dovish stance of the Fed could weigh on the dollar and boost gold prices, as a lack of rate hikes makes the greenback less attractive to investors.

Traders should keep a close eye on the latest developments in the Brexit saga, as a key vote in parliament on Tuesday could affect the direction of gold prices. This will mark the second time that parliament is voting on the government’s withdrawal agreement. Prime Minister May suffered a humiliating defeat in January, when the proposal was defeated by 290 votes. Will the government fare any better this time around? After consultations in Brussels, May has said that she secured “legally binding” changes from the E.U., which would allow the U.K. to cancel the backstop arrangement over Ireland. Still, it’s questionable if this will be enough to sway enough Conservative lawmakers to vote for the deal, as many of them suspect that the backstop will prevent the U.K. from getting out of the European Union. If the vote on withdrawal is rejected by lawmakers, the next step is another set of votes on Wednesday – one on a no-deal Brexit, and the second on requesting the EU to extend Article 50 and delay Brexit beyond March 29.

Trade trembles and Brexit bumbling start the week

Brexit and sterling volatility expected

XAU/USD Fundamentals

Tuesday (March 12)

  • 8:30 US CPI. Estimate 0.2%. Actual 0.2%.
  • 8:30 US Core CPI. Estimate 0.2%. Actual 0.1%
  • 8:45 US FOMC Member Brainard Speaks
  • 13:01 US 10-year Bond Auction

Wednesday (March 13)

  • 8:30 US Core Durable Goods Orders. Estimate 0.1%
  • 8:30 US Durable Goods Orders. Estimate -0.5%
  • 8:30 US PPI. Estimate 0.2%

*All release times are EST

*Key events are in bold

XAU/USD for Tuesday, March 12, 2019

XAU/USD March 12 at 12:45 DST

Open: 1293.49 High: 1299.68 Low: 1292.14 Close: 1297.81

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1243 1261 1284 1306 1326 1344

XAU/USD edged higher in the Asian and showed limited movement in the European session. The pair is steady in North American trade

  • 1284 is providing support
  • 1306 is the next resistance line
  • Current range: 1284 to 1306

Further levels in both directions:

  • Below: 1284, 1261 and 1243
  • Above: 1306, 1326, 1344 and 1365