Gold Slips to $1065 as Markets Eye US Inflation Numbers

Gold has posted considerable losses at the start of the week, as the base metal trades at $1064.80 per ounce in the North American session. Taking a look at economic news, it’s a very quiet day, with no US releases. The markets are keeping a close eye on US CPI, which will be released on Tuesday.

Gold prices remain depressed, as the US dollar has played kingmaker in recent weeks. Gold has leveled off in December, after losing about 8 percent of its value in November, as commodity prices continue to head south. The main catalyst for gold’s misfortunes has been the projected rate hike by the Federal Reserve on Wednesday, as higher interest rates make yield-bearing assets more attractive. Geopolitical crises often see investors scurry to gold, but the terror attacks in France and fighting in Syria and Iraq and cold-war tensions between Russia and the West have failed to stem gold’s steep descent.

The markets have become somewhat spoiled with strong job numbers out of the US, so weak employment readings last week came as a rude surprise. Last week, Unemployment Claims shot up to 282 thousand, its highest level in two months. The markets had expected a reading of 266 thousand. Still, the four-week average of unemployment claims remains at low levels. This was followed by JOLT Job Openings, which slipped to 5.38 million, sharply lower than the previous month’s reading of 5.53 million. This soft figure was way off the estimate of 5.59 million. Will these weak numbers deter the Federal Reserve from  proceeding with an expected rate hike at the policy meeting on December 16? There are no guarantees as to what the Fed has in mind for the markets, but the likelihood remains very high that a rate hike will occur, to the point that we’re likely to see strong volatility in the markets if the Fed doesn’t press the rate trigger this week.

XAU/USD Fundamentals

Monday (Dec. 14)

  • There are no releases on Monday

Upcoming Key Events

Tuesday (Dec. 15)

  • 12:30 US CPI. Estimate 0.0%
  • 12:30 US Core CPI. Estimate 0.2%

*Key releases are highlighted in bold

*All release times are GMT

XAU/USD for Monday, December 14, 2015

Forex Rate Graph 21/1/13

XAU/USD December 14 at 17:45 GMT

XAU/USD 1064.80 H: 1077 L: 1063

XAU/USD Technical

S3 S2 S1 R1 R2 R3
980 1024 1043 1080 1098 1134
  • XAU/USD posted losses in the Asian session. The pair improved in the European session, but has continued moving downward in North American trade.
  •  1080 is providing resistance
  • 1043 is the next support level
  • Current range: 1043 to 1080

Further levels in both directions:

  • Below: 1043, 1024 and 980
  • Above: 1080, 1098, 1134 and 1151

OANDA’s Open Positions Ratio

In the XAU/USD ratio, long positions continue to command a solid majority (71%). This is indicative of strong trader bias towards gold prices reversing directions and moving to higher levels.

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.