Gold at $1080, Markets Eye US Inflation Reports

Gold is under pressure on Tuesday, as the metal trades at a spot price of $1080.54 in the European session. In the US, today’s key events are CPI and Core CPI. On Wednesday, the Federal Reserve will release the minutes of its October policy meeting, and the markets will be keenly interested in the comments of policymakers regarding a rate hike.

Friday’s terror attacks in Paris, which killed 132 people and injured another 350, sent shock waves around the world and hurt market risk sentiment in the process. However, expectations that gold, traditionally a safe haven for investors in times of trouble and uncertainty, would gain ground after the Paris attacks have failed to materialize, as the metal continues its steep slide in November. Gold prices have dropped almost $90 since October 29, a decline of more than 7 percent. On Tuesday, gold slipped to its lowest level since February 2010. Major currencies such as the euro and Japanese yen have fallen in recent days, but gold has not been a beneficiary of this downward movement. With the US releasing key inflation numbers, followed by the Fed minutes, gold prices could continue to soften during the week.

The Fed watch continues, as speculation has increased that the Federal Reserve will begin a series of rate hikes, commencing in December. Fed Chair Janet Yellen has called the December meeting a “live possibility” of a rate hike. With the US economy close to full employment and many economic indicators pointing upwards, one of the last pieces in the puzzle is consumer inflation, which will be released later on Tuesday. The October CPI and Core CPI reports could play a crucial factor in determining whether the Fed makes a move and raises rates next month, and should be treated by traders as market-movers. Strong CPI readings could win over Fed policymakers who are concerned about whether the economy is strong enough to withstand a rate hike, while figures below the forecast would dampen expectations of a rate move before 2016. Traders should be prepared for volatility after the CPI releases.

XAU/USD Fundamentals

Tuesday (Nov. 17)

• 13:30 US CPI. Estimate 0.2%
• 13:30 US Core CPI. Estimate 0.2%
• 14:15 US Capacity Utilization Rate. Estimate 77.5%
• 14:15 US Industrial Production. Estimate 0.1%
• 15:00 US Mortgage Delinquencies
• 15:00 US NAHB Housing Market Index. Estimate 64 points
• 21:00 US TIC Long-Term Purchases

Upcoming Key Events

Wednesday (Nov. 18)

• 13:30 US Building Permits. Estimate 1.15M 
• 19:00 US FOMC Meeting Minutes

*Key releases are highlighted in bold

*All release times are GMT

XAU/USD for Tuesday, November 17, 2015

XAU/USD November 17 at 10:20 GMT

XAU/USD 1080 H: 1098 L: 1088

XAU/USD Technical

• XAU/USD has posted losses in the Asian session and is steady in the European session.
• On the downside, 1080 was tested earlier and remains under strong pressure.
• 1098 is an immediate resistance line.
• Current range: 1080 to 1098

Further levels in both directions:

• Below: 1080, 1043 and 1024
• Above: 1098, 1134, 1151 and 1162

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged, reflective of a lack of significant movement from gold. Long positions have a strong majority (79%), indicative of trader bias towards gold prices moving upwards.

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.