Gold Moves Higher Ahead of ECB Decision on QE

Gold has posted gains on Tuesday, with a spot price of $1289.71 per ounce in the European session. The metal is now trading at its highest level since August. On the release front, it’s a quiet day in the US, with NAHB Housing Market Index the only indicator on the calendar.

Gold continues its impressive run and is within striking distance of the $1300 level. Gold has been a winner from the recent volatility in the currency markets, as investors have looked to gold as a safe haven in recent weeks. Gold has climbed 4.7% percent since the SNB announcement last Thursday, when the SNB suddenly abandoned its cap that set EUR/CHF at 1.20, sending shock waves across global markets. This resulted in the euro recording sharp losses against the Swiss franc and the US dollar.

It has been less than a week since the SNB stunned the markets by suddenly removing its cap with the euro. However, the markets have had to quickly change focus, as there is growing anticipation that the ECB will announce a QE package on Thursday, when the ECB meets for a crucial policy meeting. The Eurozone has been plagued by deflation and weak growth, and the SNB shocker only reinforces the belief that the ECB will finally make a move. Even if QE has been priced in, there’s no way to know the size of such a scheme, so traders could be in for further volatility in the currency and commodity markets later in the week.

XAU/USD for Tuesday, January 20, 2015

XAU/USD January 20 at 12:15 GMT

XAU/USD 1289.30 H: 1294.13 L: 1274.05

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1240 1255 1275 1300 1322 1345

 

  • XAU/USD was flat in the Asian session. The pair has moved higher in the European session.
  • On the downside, 1275 has some breathing room as the pair has moved higher. 1255 is next.
  • 1300 is a weak resistance line. 1322 is stronger.
  • Current range: 1275 to 1300

Further levels in both directions:

  • Below: 1275, 1255, 1240, 1215 and 1200
  • Above: 1300, 1322, 1345 and 1375

 

OANDA’s Open Positions Ratio

XAU/USD ratio has a majority of long positions, indicating trader bias towards gold moving to higher ground.

XAU/USD Fundamentals

  • 15:00 US FOMC Member Jerome Powell Speaks.
  • 15:00 US NAHB Housing Market Index. Estimate 58 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.