Gold has posted sharp gains in the Tuesday session, after starting the trading week with losses. In the North American session, the spot price for one ounce of gold is $1254.68, up 1.02% on the day. On the release front, Factory Orders posted a gain of 0.4% in May, beating the estimate of 0.1%. On Thursday, the FOMC will release the minutes of its June meeting, when the Fed raised rates by a quarter-point.
It’s been a rough ride for gold, which as posted three straight losing weeks. 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 headway and move higher. 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.
U.S markets will be on holiday for the Fourth of July, and the FOMC minutes from the June meeting follow on Thursday. Traders should expect this event to be a market-mover, as the Federal Reserve raised rates at this meeting, to a range between 1.75% and 2.00%. This marked the second rate hike this year. How many more hikes will we see in 2018? Policymakers appear split between three and four moves, as the U.S economy is booming, but the threat from escalating trade tensions has the Fed concerned. Investors will be looking for clues from the minutes as to Fed monetary policy in the second half of 2018.
