Gold Steady Ahead of Key US Numbers

Gold is trading just shy of the key $1300 level on Thursday. In the European session, the spot price stands at $1299.07 per ounce. On the release front, it’s a busy day with three key events, Building Permits, Unemployment Claims and the Philly Fed Manufacturing Index.

Federal Reserve Chair Janet Yellen concluded two days of testimony on Capitol Hill on Wednesday, testifying before the House Financial Services Committee. Yellen declined to answer questions about when the Fed would begin to raise rates, but she did acknowledge that most economists expect the Fed to make a move in the third quarter of 2015. On Tuesday, the dollar moved higher when Yellen said that the economy still required monetary stimulus, but rates could increase sooner than expected if inflation and job numbers improved more quickly than anticipated. The Fed’s asset purchase program (QE) has flooded the economy with over $2 trillion, keeping interest rates at ultra-low levels, but the Fed has been steadily reducing the program since last December. Currently, the Fed is pumping $45 billion/month into the economy, and the next taper is expected in August, with plans to terminate QE in October.

Recent US inflation numbers have been weak, so the markets were pleasantly surprised with the June release of the Producer Price index, the primary gauge of inflation in the manufacturing sector. The index improved to 0.4%, beating the estimate of.0.2%. Core PPI, which excludes volatile items, posted a weak gain of 0.2%, matching the estimate. With Janet Yellen telling Congress that a rate hike could be pushed forward if inflation and employment data exceeds expectations, stronger inflation numbers such as the June PPI will put more pressure on the Fed to raise rates.

 

XAU/USD for Thursday, July 17, 2014

XAU/USD July 17 at 11:15 GMT

XAU/USD 1299.07 H: 1308.22 L: 1303.90

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1231 1252 1275 1300 1315 1331

 

  • XAU/USD edged higher in the Asian session and is showing little movement in European trading.
  • On the upside, 1300 was breached earlier and remains under strong pressure. 1315 is stronger.
  • 1275 is providing support. 1252 is next.
  • Current range: 1275 to 1300.

Further levels in both directions:

  • Below: 1275, 1252, 1231 and 1204.
  • Above: 1300, 1315, 1331 and 1354

 

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged on Thursday. This is not consistent with the movement of the pair, as gold has edged higher. The ratio has a majority of long positions, indicative of trader bias towards gold continuing to move higher against the US dollar.

 

XAU/USD Fundamentals

  • 12:30 US Building Permits. Estimate 1.04M.
  • 12:30 US Unemployment Claims. Estimate 310K.
  • 12:30 US Housing Starts. Estimate 1.02M.
  • 14:00 US Philly Fed Manufacturing Index. Estimate 15.6 points.
  • 14:30 US Natural Gas Storage. Estimate 99B.

*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.