Gold Edges Lower Ahead of US Retail Sales, Inflation Data

Gold has posted slight losses on Wednesday, as the spot price stands at $1222.55 per ounce in the European session. After strong gains last week, gold prices have weakened slightly. On the release front, we’ll get a look at US releases after a quiet start to the week. There are three key events on the calendar – Retail Sales, Core Retail Sales and PPI.

US markets were off on Monday for a holiday, so it’s been a quiet week until now for XAU/USD. That could change later on Wednesday, as the US releases key consumer spending and inflation data. The markets are keeping low expectations, so traders should be prepared for some movement from the pair if there are some unexpected readings from Wednesday’s releases.

The US dollar has looked razor sharp against gold, as the metal has lost about 5% of its value since the start of September. However, the greenback’s rally was interrupted by last week’s FOMC minutes, which were unexpectedly dovish. In the minutes, the Fed poured some cold water on rising expectations of a rate hike, as a number of policymakers said that the Federal Reserve should take a more data-dependent approach regarding a rate hike. The Fed also voiced concern about the rising strength of the US dollar which could weigh on the recovery. On the weekend, FOMC member Stanley Fischer said that the Fed could slow tightening if global growth is weaker than expected. Strong US numbers have raised expectations about a rate hike, but clearly the Fed is taking a cautious approach regarding the timing of a rate hike. Still, with QE set to wind up by the end of the month, rising speculation about higher rates bodes well for the US dollar.

XAU/USD for Wednesday, October 15, 2014

XAU/USD October 15 at 8:30 GMT

XAU/USD 1222.55 H: 1230.22 L: 1222.08

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1156 1186 1215 1240 1252 1275

 

  • Gold has edged lower in the Asian and European sessions.
  • On the downside, 1215 is under pressure. Will the pair break below this barrier during the day?
  • 1240 is an immediate resistance line. 1252 is next.
  • Current range: 1215 to 1240.

Further levels in both directions:

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

 

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged on Wednesday. This is not consistent with the pair’s movement, as gold has posted slight losses. The ratio has a majority of long positions, indicative of trader sentiment in favor of gold reversing directions and moving higher.

 

XAU/USD Fundamentals

  • 12:30 US Core Retail Sales. Estimate 0.2%.
  • 12:30 US PPI. Estimate 0.1%.
  • 12:30 US Retail Sales. Estimate -0.1%.
  • 12:30 US Core PPI. Estimate 0.1%.
  • 12:30 US Empire State Manufacturing Index. Estimate 20.3 points.
  • 14:00 US Business Inventories. Estimate 0.4%.
  • 18:00 US Beige Book.
  • 18:00 US Federal Budget Balance. Estimate 82.3B.

*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.