Gold Steady Ahead of US Consumer Inflation, Jobless Claims

Gold has posted modest gains on Thursday, recovering losses sustained a day earlier. On the release front, it’s a very busy day, with four key indicators – Core CPI, CPI, Unemployment Claims and the Philly Fed Manufacturing Index. Any unexpected readings from these events could translate into some volatility in gold prices.

The Federal Reserve released its minutes on Wednesday and there were no clues about the timing of a rate hike. The markets are expecting rates to rise in the second half of 2015, but this will of course depend on economic conditions. With inflation below the Fed target of 2%, there is less pressure to raise rates. The minutes also noted that that weak economic outlooks in Europe and Japan are unlikely to have a negative impact on the US economy.

The ECB hasn’t had much success in kick-starting the ailing Eurozone economy. Deep interest rate cuts haven’t boosted growth or inflation, so the ECB has reached deeper into its toolbox and  purchased covered bonds and asset-backed securities. So far, these purchases have been from the private sector, but the ECB could decide to expand these purchases to government bonds, known has quantitative easing (QE). However, there is strong resistance to QE from national central banks, such as the powerful German Bundesbank. Speaking before a European parliamentary committee on Monday, Draghi said that QE remains at option. If the ECB does decide to make such a move, the wobbly euro could lose more ground.

XAU/USD for Thursday, November 20, 2014

XAU/USD November 20 at 11:45 GMT

XAU/USD 1192.79 H: 1197.13 L: 1176.82

 

XAU/USD Technical

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

 

  • XAU/USD posted gains late in the Asian session and this trend has continued in European trade.
  • On the downside, 1175 is providing support. 1156 is stronger.
  • 1200 is an immediate resistance line. 1215 follows.
  • Current range: 1200 to 1215.

Further levels in both directions:

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

 

OANDA’s Open Positions Ratio

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

 

XAU/USD Fundamentals

  • 12:45 US FOMC Member Daniel Tarullo Speaks.
  • 13:30 US CPI. Estimate -0.1%.
  • 13:30 US Core CPI. Estimate 0.2%.
  • 13:30 US Unemployment Claims. Estimate 286K.
  • 14:45 US Flash Manufacturing PMI. Estimate 56.2 points.
  • 15:00 US Philly Fed Manufacturing Index. Estimate 18.9 points.
  • 15:00 US Existing Home Sales. Estimate 5.16M.
  • 15:00 US CB Leading Index. Estimate 0.6%.
  • 15:30 US Natural Gas Storage. Estimate -12B.
  • 18:30 US FOMC Member Loretta Mester 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.