Gold Calm Ahead of Inflation, Consumer Confidence Numbers

Gold is listless on Friday, continuing this week’s trend of very little activity. The spot price stands at $1312.00 per ounce in the European session. It’s a busy day on the event calendar, led by two key releases on the calendar – PPI and UoM Consumer Sentiment. The markets are bracing for a soft PPI, while Consumer Sentiment is expected to post another strong reading.

Gold prices remain above the key $1300 level, as the world keeps a close and worried eye on events in Ukraine and the Middle East. In eastern Ukraine, fighting continues between Ukrainian forces and pro-Russian separatists, and the UN says that over 2000 people have died in the past two weeks. In Iraq, Islamic State militants, who continue to make gains in Iraq, have attacked and displaced thousands of ethnic Kurds, which has resulted in a growing humanitarian crisis. Political turmoil continues in Iraq, and the weak government is becoming increasingly irrelevant. In Gaza, a ceasefire between Israel and Hamas has been renewed until early next week, with negotiations over a long-term agreement continuing in Egypt.

In the US, Unemployment Claims were higher than expected. The indicator climbed to 311 thousand, marking a six-week high. The estimate stood at 307 thousand. Employment indicators are being closely scrutinized by analysts, as the strength of the labor market is one of the most important factors influencing the Federal Reserve regarding the timing of an interest rate hike. A rate increase is expected by mid-2015, but stronger economic data, especially on the employment front, could hasten a move by the Fed. Earlier in the week, JOLTS Job Openings hit its highest level in 13 years, although it too missed expectations.

Meanwhile, US retail sales data disappointed on Wednesday. Retail Sales dropped to a flat 0.0% last month, its weakest showing since January. The estimate stood at 0.2%. Core Retail Sales wasn’t much better, posting a gain of 0.1%, down from 0.4% a month earlier. This was well short of the estimate of 0.4%. Retail sales are the primary gauge of consumer spending, and July’s weak numbers points to a slow start to the third quarter. Although unemployment levels have dropped, this has not translated into stronger consumer spending, a key component of economic growth.

 

XAU/USD for Friday, August 15, 2014

XAU/USD August 15 at 10:30 GMT

XAU/USD 1312.00 H: 1315.19 L: 1311.19

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1252 1275 1300 1315 1331 1345

 

  • XAU/USD has been uneventful in the Asian and European sessions.
  • 1315 remains an immediate resistance line. 1331 is stronger.
  • 1300 is providing support. 1275 is next.
  • Current range: 1300 to 1315.

Further levels in both directions:

  • Below: 1300, 1275, 1252 and 1240
  • Above: 1315, 1331, 1345 and 1361

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in long positions on Friday, reversing the direction we saw a day earlier. This is not consistent with the movement of the pair, as gold is almost unchanged. The ratio continues to have a substantial majority of long positions, indicative of trader bias towards gold posting gains.

 

XAU/USD Fundamentals

  • 12:30 US PPI. Estimate 0.1%.
  • 12:30 US Core PPI. Estimate 0.2%.
  • 12:30 US Empire State Manufacturing Index. Estimate 20.3 points.
  • 13:00 US TIC Long-Term Purchases. Estimate 27.3B points.
  • 12:30 US Empire State Manufacturing Index. Estimate 20.3 points.
  • 13:00 US TIC Long-Term Purchases. Estimate 27.3B.
  • 13:15 US Capacity Utilization Rate. Estimate 79.2%.
  • 13:15 US Industrial Production. Estimate 0.3%.
  • 13:55 US Preliminary UoM Consumer Sentiment. Estimate 82.7 points.
  • 13:55 US Preliminary UoM Inflation Expectations.

*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.