Gold Heads Higher as FOMC Statement Looms

Gold continues to move higher on Friday, as the spot price is at $1211.77 per ounce in the European session. The metal has taken advantage of the US dollar losing ground this week and has recovered all of Friday’s sharp losses. In the US, today’s highlight is the minutes of the FOMC’s most recent policy meeting. Traders should treat this event as a market-mover.

US job numbers continue to impress. On Tuesday, JOLTS Job Openings climbed to 4.84 million, up from  4.67 million a month earlier. The indicator is on a strong upward trend, indicative of the US employment sector. Last week, Nonfarm Employment change rebounded in September, climbing to 248 thousand. This exceeded expectations of 216 thousand. The unemployment rate dipped to 5.9%, the first time it’s been below the 6% threshold in over six years. With QE slated to end later this month, the focus will shift to the timetable for an interest rake hike. Strong employment numbers such as these could put pressure on the Fed to make an interest rate move sooner rather than later in 2015, and increased speculation about a rate move will likely boost the dollar even further.

At its October policy meeting last week, the ECB made no changes to interest rates. The central bank did announce it would start buying covered bonds in October and begin ABS purchases in Q4. However, there were no specifics and no mention of any purchase of government bonds. This left the markets underwhelmed by the ECB announcement and the euro remains at low levels. Given that the ECB shows no signs of introducing a full-blown QE, it’s questionable whether ABS will help boost the anemic Eurozone economy, as inflation and growth levels continue to sputter.

XAU/USD for Wednesday, October 8, 2014

XAU/USD October 8 at 11:15 GMT

XAU/USD 1211.77 H: 1220.71 L: 1209.19

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1136 1156 1186 1215 1240 1252

 

  • Gold was edged upwards in the Asian and European sessions. The pair is putting pressure on resistance at 1215. Will this line break during the day?
  • 1186 is the next support level.
  • 1215 is a weak resistance line. 1240 is next.
  • Current range: 1186 to 1215.

Further levels in both directions:

  • Below: 1186, 1156, 1136 and 1101
  • Above: 1215, 1240, 1252, 1275 and 1300

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in short positions on Wednesday, continuing the direction which has marked the ratio all week. This is not consistent with the pair’s movement, as gold continues to post gains. The ratio has a majority of long positions, indicative of trader sentiment in favor of gold moving to higher levels.

XAU/USD Fundamentals

  • 14:30 US Crude Oil Inventories. Estimate 2.1M.
  • 17:01 US 10-year  Bond Auction.
  • 18:00 US FOMC Meeting Minutes.

*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.