Gold Pushes Above $1100

Gold has posted gains on Monday, trading at $1106.86 an ounce in the North American session. On the release front, it’s a quiet start to the week, with no US releases on the calendar. On Tuesday, the US will release a key event, CB Consumer Confidence.

Gold has posted strong gains in the month of January, as jittery investors have shunned risky assets in favor of safe-haven assets like gold. The markets have nervously watched as China, the world’s second largest economy, continues to show signs of slowdown. Chinese GDP for the fourth quarter showed another drop, as the key indicator dipped to 6.8%, shy of the forecast of 6.9%. Chinese annual GDP for 2015 came in at 6.9%, the weakest gain in 25 years. A softer Chinese economy and plunging oil prices are having major repercussions in the global stock markets and currency markets, and this has spelled good news for the shiny metal.

The US economy is in good shape, and received a vote of support from the Federal Reserve when it raised interest rates in December. However, one soft spot which has garnered a lot of concern is the inflation picture, with indicators pointing to very weak inflation. This was underscored last week, as key inflation numbers missed their estimates. CPI dropped 0.1%, short of the estimate of 0.0%. Core CPI also softened, posting a gain of 0.1%. This was short of the forecast of 0.2%. Weak inflation indicators remain a concern for Federal Reserve policymakers, who must decide whether another interest rate hike would be appropriate in early 2016. Meanwhile, US jobless claims jumped to their highest level in 11 months, as the reading of 293 thousand was much worse than the estimate of 279 thousand. Will these weak numbers dampen Fed enthusiasm for a rate hike? There is speculation that the Fed could make a move in March, contingent on the strength of the US economy. A lack of inflation points to slack in the economy, and the Fed could hold off on another hike until inflation levels improve.

XAU/USD Fundamentals

Monday (Jan. 25)

  • There are no US events on the schedule

Key Upcoming Events

Tuesday (Jan. 26)

00:00 US CB Consumer Confidence. Estimate 96.6 points

*All release times are EST

*Key events are in bold

XAU/USD for Monday, January 25, 2016

Forex Rate Graph 21/1/13

XAU/USD January 25 at 11:30 GMT

Open: 1097.87 Low: 1097.67 High: 1108.05 Close: 1106.86

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1043 1080 1098 1134 1151 1175
  • XAU/USD has posted gains in the Asian and European sessions. The pair has leveled off in North American trade.
  • There is resistance at 1134
  • 1098 remains busy and has switched to a support role following gains by the pair
  • Current range: 1098 to 1134

Further levels in both directions:

  • Below: 1098, 1080, 1043 and 1024
  • Above: 1134, 1151 and 1175

OANDA’s Open Positions Ratio

XAU/USD ratio is showing a solid majority for long positions (70%), indicative of strong trader bias towards gold prices continuing to move 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.