Surging US Dollar Pushes Gold Close to 2014 Low

Gold remains under pressure on Tuesday, as the metal continues to lose ground to the strong US dollar. In the European session, the spot price stands at $1207.40 per ounce just above the 2014 low of $1201.97. On the release front, today’s key event is CB Consumer Confidence, with the markets expecting another strong reading above the 90-point level.

Recent sharp gains by the US dollar are weighing on gold prices, as a stronger dollar diminishes the metal’s appeal as an alternative asset to the dollar. The dollar has enjoyed a spectacular September, and gold prices have tumbled over 6% during this period. We could see gold dip below $1200, which last occurred in December 2013.

Over in the US, Pending Home Sales posted a decline of 1.0%, compared to last month’s gain of 3.3%. The important housing indicator has shown strong movement, resulting in readings that have been well off market estimates. US housing indicators continue to paint a mixed picture, as New Home Sales jumped last month, while Existing Home Sales softened and was well short of  expectations.

XAU/USD for Tuesday, September 30, 2014

XAU/USD September 30 at 12:30 GMT

XAU/USD 1207.40 H: 1218.90 L: 1204.45

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1136 1156 1186 1210 1240 1252

 

  • XAU/USD was flat in the Asian session. The pair has posted losses in European trade, breaking below support at 1210.
  • 11186 is an immediate support level. 1156 is next.
  • 1210 has reverted to a resistance role as gold trades at lower levels. This line is fluid and could see further action during the day. There is stronger resistance at 1240.
  • Current range: 1186 to 1210.

Further levels in both directions:

  • Below: 1186, 1156, 1136 and 1101
  • Above: 1210, 1240, 1252, 1275 and 1300

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in short positions in Tuesday trade. This is consistent with the pair’s movement, as gold has sustained losses. The ratio has a substantial majority of long positions, indicative of trader bias towards gold reversing directions and moving to higher ground.

 

XAU/USD Fundamentals

  • 13:00 US S&P Composite-20 HPI. Estimate 7.5%.
  • 13:45 US Chicago PMI. Estimate 61.6 points.
  • 14:00 US CB Consumer Confidence. Estimate 92.2 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.