Gold Rallies as $1200 in Sight

Gold prices are steady on Monday, after strong gains on Friday. In the European session, the spot price stands at $1189.39. On the release front, today’s highlight is the Empire State Manufacturing Index. The markets are expecting a strong reading for October, with an estimate of 12.1 points.

ECB head Mario Draghi and his colleagues are under strong pressure to “do something” to kick-start the weak Eurozone economy. Deep interest rate cuts haven’t had much effect, so the ECB has purchased covered bonds and asset-backed securities. So far, these securities have been from the private sector, and the ECB could decide to expand these purchases to government bonds, known has quantitative easing. However, there is resistance to quantitative easing from national central banks, such as the powerful Bundesbank. We could learn more about Draghi’s plans when he testifies on Monday before the Committee on Economic and Monetary Affairs in Brussels.

US consumer indicators looked strong on Friday. Retail Sales and Core Retail Sales both posted gains of 0.3%, edging above the estimate of 0.2%. UoM Consumer Sentiment continued its upward trend, climbing to 89.7 points in November. This was the indicator’s strongest performance since July 2007. Meanwhile, US Unemployment Claims has looked solid in recent readings, but the key indicator jumped to 290 thousand, missing the estimate of 282 thousand. This marked a seven-week high for the key indicator. The news wasn’t any better from JOLTS Jobs Openings, which weakened to 4.74M, down from 4.84M a month earlier. The estimate stood at 4.81M.

XAU/USD for Monday, November 17, 2014

XAU/USD November 17 at 9:20 GMT

XAU/USD 1189.39 H: 1194.21 L: 1182.04

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1130 1156 1175 1200 1215 1240

 

  • XAU/USD broke through some resistance lines as the metal posted strong gains on Friday. The pair has steadied on Monday and has been uneventful in the Asian and European sessions.
  • 1175 is an immediate support level. 1156 is next.
  • The round number of 1200 is a weak resistance line. 1215 follows.
  • Current range: 1175 to 1200.

Further levels in both directions:

  • Below: 1175, 1156, 1130, 1111 and 1073
  • Above: 1200, 1215, 1240, 1255 and 1275

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in long positions on Monday. This is not consistent with the pair’s movement, as gold has posted small gains. The ratio has a majority of long positions, indicative of trader bias in favor of gold moving to higher ground.

 

XAU/USD Fundamentals

  • 13:30 US Empire State Manufacturing Index. Estimate 12.1 points.
  • 14:00 ECB President Draghi Speaks.
  • 14:15 US Capacity Utilization Rate. Estimate 79.3%.
  • 14:15 US Industrial Production. Estimate 0.2%.

*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.