Gold Jumps After Brussels Attacks Before Retracting

Gold has showed little net change on Tuesday, with the spot price trading at $1246.43 an ounce in the North American session. In economic news, the US House Price Index improved to 0.5%, matching the forecast. As well, the US released two manufacturing reports. Manufacturing PMI came in at 51.4 points, within expectations. The Richmond Manufacturing Index sparkled, jumping 22 points. This easily beat the estimate of -1 point.

Gold tends to rise in times of crisis or uncertainty, and this was the case on Tuesday, as the metal jumped about 1 percent following news of a series of explosions in Brussels, which killed 33 people and wounded at least 200. The attacks took place at the international airport and a subway station, causing European stock markets to fall. Gold prices have since retracted, wiping out most of the earlier gains. The situation in Belgium remains fluid, and further developments could lead to gold showing additional volatility.

What does the Federal Reserve have planned? Last week’s policy statement appeared to pour cold water on any imminent rate hikes, but “not so fast”, according to two Federal Reserve officials. On Monday, John Williams, president of the San Francisco Fed, said that the Fed could raise rates in April and June, if economic conditions improve. Although the dot plot (an FOMC projection of rate hikes) was lowered at the March meeting, he insisted that the Fed had not changed its path of rate hikes. His comments were echoed by Atlanta Fed Dennis Lockhart, who also said that an April rate move was a clear possibility. Lockhart noted that the US economy was holding up well, despite weak global conditions. Lockart said that the economy was close to full employment and the Fed’s target of 2 percent inflation was attainable. However, it should be kept in mind that neither Willams nor Lockhart is a voting member of the FOMC. The markets will be hoping to learn more about the Fed’s plans from two other Fed presidents who will speak on Tuesday, Charles Evans and Patrick Harker.

XAU/USD Fundamentals

Tuesday (March 21)

  • 9:00 US HPI. Estimate 0.5%. Actual 0.5%
  • 9:45 US Flash Manufacturing PMI. Estimate 51.6 points. Actual 51.4 points
  • 10:00 US Richmond Manufacturing Index. Estimate -1 points. Actual 22 points

*Key releases are highlighted in bold

*All release times are DST

XAU/USD for Tuesday, March 22, 2016

Forex Rate Graph 21/1/13

XAU/USD March 22 at 13:00 DST

Open: 1243.48 Low: 1243.09 High: 1260.07 Close: 1246.43

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1191 1205 1232 1255 1279 1303
  • XAU/USD was uneventful in the Asian session. The pair posted sharp gains and later retracted in European trade. The downward trend has continued in the North American session
  • There is resistance at 1255
  • 1232 is providing support
  • Current range: 1232 to 1255

Further levels in both directions:

  • Below: 1232, 1205 and 1191
  • Above: 1255, 1279, 1303 and 1322

OANDA’s Open Positions Ratio

XAU/USD ratio is showing little movement. Long positions have a strong majority (57%), indicative of trader bias towards gold reversing directions and 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.

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.