Gold Flat As Markets Eye US Housing, Employment Data

Gold is flat on Wednesday, as the spot price stands at $1307.44 per ounce late the European session. There is just one event on today’s schedule, Crude Oil Inventories. Investors are waiting for new economic data, and on Thursday we’ll get a look at Unemployment Claims and New Home Sales. On Tuesday, US data was a mix. CPI posted a weak gain as the key inflation index continues to struggle. Meanwhile, there was excellent news on the housing front, as Existing Home Sales exceeded expectations and hit its highest level in eight months.

US numbers were a mix on Tuesday. Inflation numbers continue to struggle, as Core CPI posted a paltry gain of 0.1%, shy of the estimate of 0.2%. The key index has looked anemic in 2014, with its highest gain this year at just 0.3%. CPI was bit stronger, as it gained 0.3% last month, matching the forecast. Meanwhile, Existing Home Sales jumped to 5.04 million, surpassing the estimate of 4.94 million. This was the best showing we’ve seen since October, and follows a disappointing release from Housing Starts, which was published last week.

Geopolitical tensions are bad news for the markets, which crave stability. With violence continuing in Ukraine and Gaza, nervous investors have rallied around the safe-haven US dollar as well as gold, at the expense of other currencies. In Ukraine, the downing of a Malaysian Airlines jet, apparently by pro-Russian separatists, has seriously frayed relations between the West and Russia, which have already been strained since the latter annexed Crimea. Fighting continues between the separatists and Ukrainian forces in Eastern Ukraine. The Europeans are threatening stronger sanctions against Russia, and escalating tensions in eastern Ukraine could shake up the markets. In the Middle East, the fighting in Gaza between Hamas and Israel has intensified, as Israel presses on with a land offensive and casualties rise on both sides. Meanwhile, the international community is intensifying efforts to broker a cease-fire, but in the meantime the fighting continues.

 

XAU/USD for Wednesday, July 23, 2014

XAU/USD July 23 at 11:20 GMT

XAU/USD 1307.44 H: 1309.42 L: 1305.05

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1252 1275 1300 1315 1331 1354

 

  • XAU/USD is rangebound in the Asian and the European sessions, as the pair trades slightly above the 1300 level.
  • 1315 is the next resistance line. 1331 follows.
  • 1300 is providing weak support to the pair. 1275 is stronger.
  • Current range: 1300 to 1315.

Further levels in both directions:

  • Below: 1300, 1275, 1252 and 1240.
  • Above: 1315, 1331, 1354 and 1375.

 

OANDA’s Open Positions Ratio

XAU/USD ratio is almost unchanged on Wednesday. This is consistent with the lack of movement being displayed by the pair. The ratio has a majority of long positions, indicative of trader bias towards gold breaking out and moving upwards.

 

XAU/USD Fundamentals

14:30 US Crude Oil Inventories. Estimate -2.1M.

*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.