Gold Prices Flat As Markets Await Fed Minutes

Gold is drifting in Wednesday trade, as the spot price stands at $1291.73 per ounce in the European session. In the US, the Federal Reserve releases its policy meeting minutes, and Fed chair Janet Yellen speaks at a university commencement in New York. It’s an unusually slow week on the release front, with no major events scheduled until Thursday.

All eyes will be on the Federal Reserve on Wednesday, with the release of the minutes of the most recent policy meeting. The Fed has been steadily trimming its asset purchase program since December, and is expected to wind up the program before the end of 2014, provided that the economy does not take a downward spin. Since 2008, the benchmark interest rate has been close to zero, and no increases are expected before mid-2015. The pace of future increases will likely be slow to allow for a smooth adjustment from the economy and the financial markets.

Demand for gold has dropped in the first quarter of 2014, weighing on the price of the precious metal. On Tuesday, the World Gold Council released a report which found that global demand for gold had dropped in Q1 to its lowest level in four years. Demand for the metal by China, the largest buyer of gold, slipped by 18% in Q1, and other major purchasers such as India also recorded a drop in demand. Gold tends to react to geopolitical events, and the ongoing crisis in Ukraine could continue to cause volatility in gold prices.

In the US, key indicators have been generally strong, and last week ended with encouraging housing numbers. Building Permits jumped to 1.08 million, well above the estimate of 1.01 million. This was the highest level we’ve seen since December 2006. Housing Starts continues to move higher and climbed to 1.07M, compared to the estimate of 0.98M. This marked a five-month high. Meanwhile, UoM Consumer Sentiment dipped to 81.8 points, short of the estimate of 84.7 points.

 

XAU/USD for Wednesday, May 21, 2014

Forex Rate Graph 21/1/13

XAU/USD May 21 at 10:35 GMT

XAU/USD 1292.43 H: 1296.26 L: 1291.73

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1260 1275 1280 1300 1315 1330

 

  • 1280 continues to provide support. This is followed by a support line at 1275.
  • On the upside, 1300 is the next resistance line. 1315 follows.
  • Current range: 1280 to 1300.

Further levels in both directions:

  • Below: 1280, 1275, 1260 and 1252
  • Above: 1300, 1315, 1330, 1350 and 1388

 

OANDA’s Open Positions Ratio

XAU/USD ratio is almost unchanged in Wednesday trade. This is consistent with the pair’s movement, as gold is showing very little movement. The ratio has a substantial majority of long positions, reflecting a strong trader bias towards gold gaining ground against the US dollar.

Gold is flat in Wednesday trade. XAU/USD is unchanged in the European session.

 

XAU/USD Fundamentals

  • 14:00 US FOMC Member William Dudley Speaks.
  • 14:30 US Crude Oil Inventories. Estimate -0.1M.
  • 15:30 US Federal Reserve Chair Janet Yellen Speaks.
  • 17:30 US FOMC Member Narayana Kocherlakota Speaks.
  • 18:00 US FOMC Meeting Minutes.

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.