Gold in Holding Pattern Ahead of FOMC Statement

Gold is steady on Wednesday, following gains a day earlier. In the European session, the metal is trading at a spot price of $1292.10. In the US, the markets are keeping a close eye on the FOMC Statement, which will be released later in the day. The only other event is Crude Oil Inventories, with the markets expecting a strong downturn in the upcoming report.

The Federal Reserve will be in the spotlight on Wednesday, with the release of a policy statement at the end of a two-day meeting. The Fed is expected to continue to counsel patience regarding an interest rate hike, and persistently weak inflation means the Fed can take its time before having to make a monetary move. The markets will be combing through the statement and any clues as to the timing of rate hike could push gold prices lower.

Tuesday was a busy day in the US. Durable Good reports disappointed, as Durable Goods Orders plunged 3.4%, marking a 4-month low. There was no relief from Core Durable Goods Orders, which declined by 0.8%, its fifth drop in six readings. The markets had expected gains from both indicators. There was much better news later in the day, as CB Consumer Confidence jumped to 102.9 points, crushing the estimate of 95.3 points. New Home Sales followed suit, rising to 481 thousand, well above the forecast of 452 thousand.

XAU/USD for Wednesday, January 28, 2015

XAU/USD January 28 at 12:30 GMT

XAU/USD 1292.10 H: 1293.63 L: 1285.95

 

XAU/USD Technical

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

 

  • XAU/USD is showing limited movement on Wednesday.
  • On the downside, 1275 is an immediate support line. 1255 is next.
  • The round number of 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 is pointing to gains in short positions on Wednesday. This is consistent with the pair’s movement, as gold has posted small losses. The ratio has a majority of long positions, indicating trader bias towards gold moving to higher ground.

XAU/USD Fundamentals

  • 15:30 US Crude Oil Inventories. Estimate 4.2M.
  • 19:00 US FOMC Statement.
  • 19:00 US Federal Funds Rate. Estimate <0.25%

*Key releases are highlighted in bold

*All release times are GMT

 

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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.