Gold Steady, Market Brace for Weak GDP

Gold has recorded losses small gains on Friday. In the European session, the spot price for XAU/USD is trading at $1234.16 for one ounce. On the release front, it’s busy day in the US, highlighted by two key events – Preliminary GDP and UoM Consumer Sentiment. With the GDP estimate standing at just 0.4%, we could see some strong movement in the currency markets in the North American session.

The US manufacturing sector has been an Achilles heel for the US economy, with weak releases the norm for this industry. However, there was positive news on Thursday, as durable goods reports posted excellent gains in January. Core Durable Goods rose 1.8%, crushing the estimate of 0.2%. This marked the key indicator’s strongest showing since March 2014. Durable Goods Orders followed suit with a sharp rise of 4.9%, rebounding from the previous reading of -5.1%. This was stronger than the estimate of 3.0%. These excellent figures point to stronger domestic consumption, at a time when the US economy is grappling with a downturn in global demand, which has taken its toll on the export and manufacturing sectors. A strong US dollar, which has posted broad gains in recent months, has only exacerbated the situation. The good news was tempered by a weak employment report, as Unemployment Claims rose to 272 thousand, compared to 262 thousand in the previous release.

XAU/USD Fundamentals

Friday (Feb. 26)

  • 8:30 US Preliminary GDP. Estimate 0.4%
  • 8:30 US Core PCE Price Index. Estimate 0.1%
  • 8:30 US Goods Trade Balance. Estimate -61B
  • 8:30 US Personal Spending. Estimate 0.3%
  • 8:30 US Personal Income. Estimate 0.4%
  • 8:30 US Preliminary GDP Price Index. Estimate 0.8%
  • 10:00 US Revised UoM Consumer Sentiment. Estimate 91.1 points
  • 10:00 US Revised UoM Inflation Expectations
  • 10:15 US FOMC Member Jerome Powell Speaks
  • 13:30 US FOMC Member Lael Brainard Speaks

*Key releases are highlighted in bold

*All release times are EST

*Key events are in bold

XAU/USD for Friday, February 26, 2016

Forex Rate Graph 21/1/13

XAU/USD February 26 at 6:25 EST

Open: 1233.56 Low: 1228.40 High: 1240.37 Close: 1234.16

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1191 1205 1232 1255 1279 1303
  • 1232 was tested in support and is under strong pressure
  • There is resistance at 1255
  • Current range: 1232 to 1255

Further levels in both directions:

  • Below: 1232, 1205, 1191 and 1175
  • Above: 1255, 1279 and 1303

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged, consistent with the lack of movement from the pair. Long positions retain a slight majority (53%), which is indicative of trader bias towards gold 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.