Gold Rises as Markets Eye Durable Goods, Ukraine Crisis

Gold has risen on Tuesday, as the spot price stands at $1286.54 per ounce in the European session. In the US, there are two key releases, Core Durable Goods Orders and CB Consumer Confidence. Both indicators are expected to soften in July. The Ukraine crisis has heated up, as fighting between Ukrainian forces and pro-Russian militants has intensified.

In eastern Ukraine, the fighting continues. On Tuesday, Ukraine announced the capture of 10 Russian soldiers who had crossed into Ukrainian territory. Meanwhile, pro-Russian separatists paraded captured Ukrainian soldiers and continue to attack government positions. These events have overshadowed a scheduled meeting on Tuesday between the Ukrainian and Russian presidents in Minsk, Russia. The crisis has plunged relations between Russia and the West to their lowest levels since the Cold War. Europe and the US have imposed sanctions and Moscow has been quick to retaliate. The impasse could hurt countries such as Germany, which have strong trade ties with Russia.

In the US, recent numbers have been solid, and the markets are hoping for more good news on Tuesday. Core Durable Goods Orders is expected to dip to 0.5% in July. The estimate for Durable Goods Orders stands at 7.4%, and some analysts are predicting a much higher gain in July. The reason? A huge increase in the purchase of passenger planes in July. Traders should be prepared for some short-term volatility in this indicator, which could have a positive but brief impact on the US dollar. Consumer confidence is at high levels, and CB Consumer Confidence is expected to post another strong reading.

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.

 

XAU/USD for Tuesday, August 26, 2014

XAU/USD August 26 at 11:45 GMT

XAU/USD 1286.84 H: 1290.83 L: 1275.82

 

XAU/USD Technical

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

 

  • XAU/USD posted gains during the Asian session. The pair has steadied in European trading.
  • 1300 is an immediate resistance line. The next resistance level is 1315.
  • On the downside, 1275 remains under pressure. 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 pointing to gains in short positions on Tuesday. This is not consistent with the pair’s movement, as gold has posted gains. The ratio continues to have a substantial majority of long positions, indicative of trader bias towards gold continuing to move higher.

 

XAU/USD Fundamentals

  • 12:30 US Core Durable Goods Orders. Estimate 0.5%.
  • 12:30 US Durable Goods Orders. Estimate 7.4%.
  • 13:00 US HPI. Estimate 0.3%.
  • 13:00 US S&P/CS Composite-20 HPI. Estimate 8.2%.
  • 14:00 US CB Consumer Confidence. Estimate 89.1 points.
  • 14:00 US Richmond Manufacturing Index. Estimate 8 points.

*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.