Gold Reaches 1-Week High

Daily Analysis - 26/09/2017

Bullion Climbs As North Korean Threatens War

Gold settled at its highest level in close to a week on Monday, as growing tensions between the U.S. and North Korea boosted the metal's appeal as a safe-haven investment. XAUUSD ended at $1,310.60 an ounce, marking the highest finish since September 19^th.

Gold Enters Short-Term Uptrend

North Korea’s foreign minister said Monday that a weekend tweet from US President Donald Trump was being viewed as a declaration of war on his country. Furthermore, he issued a warning that Pyongyang reserved the right to retaliate, including shooting down US fighter jets even if they were outside the country’s air space.

On Sunday, the US had said it had included North Korea to its list of countries that were banned from entering the country. XAUUSD is currently hovering around the $1309 per ounce area after having broken above the key psychological level of $1300 in the previous trading session on greater than average volumes. $1314 represents the immediate upside resistance, a close above which could see fresh buyers enter the market and accelerate the move higher.

Chicago Fed Cites Slowing US Economic Growth

The Chicago Federal Reserve’s National Activity Index slid to a -0.31 during August from an upwardly revised 0.03 recorded in July, highlighting the continued volatility of the measure over the past few months. The three-month moving average of the index slipped to -0.04 last month from a neutral reading in July. The Chicago Fed’s national activity indicator is a weighted average of 85 key economic indicators that is setup so zero indicates trend growth, while a three-month average reading of below -0.70 suggests a recession.

The main drags on the index emerged as a result of softness in consumer spending and lacklustre factory output, both of which trended in negative territory for the period. US equity markets showed little reaction to the report, sustaining early sluggishness after touching record highs the previous week. Dow futures were last seen around the 22260-mark.

German Business Sentiment Dips

Data from the Ifo Institute's monthly survey, which was carried out prior to Sunday's general election, showed Business sentiment in Germany fell in September, as companies slashed their outlook. The German think tank’s business climate index declined to 115.2 from 115.9 in August. The survey, which is conducted across 7,000 companies, showed that German firms were less upbeat about their current condition and lowered their short-term outlook.

However, the index remains in positive territory, providing Europe's largest economy with a “strong tailwind” per Ifo President Clemens Fuest. As the country enters a new legislative period, Angela Merkel will now be forced to cobble together a ruling coalition to keep her CDU party in power, potentially threatening the economic outlook with more uncertainty if progress is sluggish. DAX 30 futures closed Monday at 12560, just below key resistance at 12650.

New Zealand Import Growth Outpaces Export Activity

The New Zealand economy experienced a larger-than-expected goods trade gap in August, as imports of crude oil rose while exports of cheese, milk powder, and butter declined. According to figures delivered by Statistics New Zealand late on Tuesday, the country recorded a trade deficit of NZD$ 1.24 billion last month, higher than the NZD$ 968.00 million average monthly deficit reported for August over the past five years.

The figure also came in well below the consensus estimate of NZD$ 825.00 million month over month. On a yearly basis, exports climbed 9.00% to NZD$ 3.69 billion in August, trailing expectations of NZD$ 4.05 billion. Meanwhile, goods imports edged 6.50% higher to NZD$ 4.92 billion, lifted by a 93.00% jump in the value of inbound crude oil shipments. NZDUSD is down in Tuesday morning trade, with the pair last seen hovering near 0.7230.