Gold Dips Below $1120, US Durables Disappoint

Gold is lower on Thursday, trading at a spot price of $1116.00 an ounce in the North American session. On the release front, US Core Durable Goods Orders posted a decline of 1.2%, while Durable Goods Orders plunged 5.1%. There was better news on the employment front, as unemployment claims dipped to 278 thousand, beating the forecast. Pending Home Sales disappointed with a gain of 0.1%, well below the forecast.

January has been good to gold, as the metal has recorded impressive gains of five percent since the start of the year. The metal has benefited from the turmoil which has gripped the markets due to the plunge in oil prices and the Chinese slowdown, which has seen Chinese stock markets slide and Chinese GDP dip lower. Nervous investors have dumped risk assets to due the ongoing global economic uncertainty and snapped up gold, traditionally a safe-haven asset. Gold prices moved upwards after the Federal Reserve held off from raising rates, but has retracted on Thursday.

The market spotlight was on the Federal Reserve on Wednesday, and as expected, the Fed maintained interest rates at 0.25%. The monetary policy statement was dovish in tone, as policymakers took note of soft spots in the economy, such as consumer spending and exports. The US inflation picture remains problematic, with the Fed saying that inflation levels will remain low, and may not reach the target of 2.0% until 2018. At the same time, the Fed emphasized that the US labor market remains strong. Will the Fed make another move in March? It’s a possibility, but the Fed has yet to provide any strong hints on its next move. Given the Fed’s continuing concerns about a lack of inflation however, it’s difficult to foresee another rate hike in March absent a strong improvement in key US indicators.

XAU/USD Fundamentals

Thursday (Jan. 28)

  • 8:30 US Core Durable Goods Orders. Estimate -0.1%. Actual -1.2%
  • 8:30 US Unemployment Claims. Estimate 281K. Actual 279K
  • 8:30 US Durable Goods Orders. Estimate -0.6%. Actual -5.1%
  • 10:00 US Pending Home Sales. Estimate 1.0%. Actual 0.1%
  • 10:30 US Natural Gas Storage. Estimate -215B. Actual -211B

Friday (Jan. 29)

  • 8:30 US Advance GDP. Estimate 0.8%

*All release times are EST

*Key events are in bold

XAU/USD for Thursday, January 28, 2016

Forex Rate Graph 21/1/13

XAU/USD January 28 at 11:45 GMT

Open: 1116.58 Low: 1111.87 High: 1122.28 Close: 1116.58

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1043 1080 1098 1134 1151 1175
  • XAU/USD posted slight losses in the Asian session. After leveling off in the European session, the pair has resumed downward movement in the North American session.
  • There is resistance at 1134
  • 1098 is providing support
  • 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 little movement, as long positions continue to command a solid majority (65%). This is indicative of strong trader bias towards gold prices reversing directions and moving higher.

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.