Gold Starts Week With Little Movement

Gold is calm on Monday, as the spot price stands at $1279.95 per ounce in the European session. In the US, today’s only event is New Home Sales. The markets are expecting the key indicator to improve in the July release.

Financial leaders and central bankers met at Jackson Hole for a conference, and the markets were all ears as Fed chair Janet Yellen delivered the keynote address on Friday. Any hopes for some dramatic news were dashed, however, as Yellen did not provide any clues as to the timing of a rate hike. She reiterated that the US job market still needed to improve, so employment numbers remain a crucial factor in any rate move by the Fed. There is a divergence in monetary stance between the ECB and the Fed, as the Fed is winding up QE, while the ECB may be forced to provide stimulus to the sagging Eurozone economy.

US releases wrapped up the week on a high note. Unemployment Claims improved to 298 thousand, lower than the estimate of 302 thousand. The key indicator has now beaten the estimate in six of the past seven readings. Thursday’s other key event, the Philly Fed Manufacturing Index, shot higher in July, rising to 28.0 points. The markets had expected the indicator to slip to 19.7 points. There was more good news on the housing front, as Existing Home Sales improved to 5.15 million, well above the estimate of 5.01 million. This marked the highest level we’ve since September 2013. What is particularly encouraging is that the data stems from a wide range of sectors, which points to balanced economic growth.

In a highly anticipated event, the Federal Reserve released its policy meeting minutes on Wednesday. The minutes were hawkish in tone, with the Fed saying that an interest rate hike could come sooner rather than later if employment numbers continue to improve. The Fed said that the economy continues to improve, but the QE program, which is scheduled to wind up in October, will not be accelerated. Once the asset purchase scheme is terminated, the guessing game as to a rate hike will only intensify.

 

XAU/USD for Monday, August 25, 2014

XAU/USD August 25 at 12:30 GMT

XAU/USD 1279.95 H: 1281.40 L: 1275.68

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1240 1252 1275 1300 1315 1331

 

  • XAU/USD has shown little activity on Monday, staying slightly above support at 1275.
  • 1300 continues to provide resistance. The next resistance line is 1315.
  • On the downside, 1275 is under strong pressure and could break during the day. 1252 is stronger.
  • Current range: 1275 to 1300.

Further levels in both directions:

  • Below: 1275, 1252, 1240 and 1210
  • Above: 1300, 1315, 1331 and 1345

 

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged on Monday. This is consistent with the pair’s current lack of movement. The ratio continues to have a substantial majority of long positions, indicative of trader bias towards gold breaking out and moving higher.

 

XAU/USD Fundamentals

14:00 US New Home Sales. Estimate 426K.

*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.