Gold Gains on Weak US Housing Data

Gold has been under strong pressure lately but the metal rebounded nicely on Tuesday. In the European session, the spot price stands at $1233.06 per ounce. There are no major US releases today, but the markets will be keeping an eye on the Richmond Manufacturing Index. The indicator is expected to post another strong reading.

US Existing Home Sales didn’t impress in August, slipping to 5.05 million, compared to 5.15 million in the previous release. This was way off the estimate of 5.21 million. The indicator had exceeded the estimate in the past three releases, so the weak numbers disappointed the markets. We’ll get a look at New Home Sales on Wednesday. Gold took advantage of the weak US numbers and has posted strong gains on Wednesday.

The US economy may be much more robust than that of the Eurozone, but it is also grappling with weak inflation levels. CPI, the primary gauge of consumer inflation, came in at -0.2%, its first drop since October. The estimate stood at +0.1%. Core CPI followed suit with a flat reading of 0.0%. This was the first time the index failed to post a gain since October 2010. The weak numbers follow disappointing manufacturing inflation data. PPI, a key event, dipped to just 0.0%, a 3-month low. The estimate stood at 0.1%. Core PPI slipped to 0.1%, down from 0.2% a month earlier. This matched the forecast. Low inflation levels could delay the Federal Reserve’s plan to raise interest rates, which is widely expected to take place in the first half of 2015.

 

XAU/USD for Tuesday, September 23, 2014

XAU/USD September 23 at 11:20 GMT

XAU/USD 1233.06 H: 1234.31 L: 1214.25

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1156 1186 1210 1240 1252 1275

 

  • XAU/USD was steady in the Asian session and has posted strong gains in European trade.
  • 1210 has some breathing room as the pair trades at higher levels. 1186 is stronger.
  • On the upside, 1240 is under pressure. The next resistance line is 1252.
  • Current range: 1210 to 1240.

Further levels in both directions:

  • Below: 1210, 1186, 1156 and 1111
  • Above: 1240, 1252, 1275, 1300, and 1315

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in long positions on Tuesday, reversing the direction seen a day earlier. This is consistent with the pair’s movement, as gold has moved upwards. The ratio has a substantial majority of long positions, indicative of trader bias towards gold continuing to move higher.

 

XAU/USD Fundamentals

  • 13:00 US HPI. Estimate 0.4%.
  • 13:20 US FOMC Member Jerome Powell Speaks.
  • 13:45 US Flash Manufacturing PMI. Estimate 58.1 points.
  • 14:00 US Richmond Manufacturing Index. Estimate 10 points.
  • 18:00 US FOMC Member Narayana Kocherlakota Speaks.

*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.