Gold Subdued as Markets Eye Fed Minutes

Gold has posted small losses on Wednesday, reversing the upward movement which marked the Tuesday session. In the North American session, gold is trading at a spot price of $1225.80 an ounce. On the release front, the EIA Crude Inventory report showed a sharp decline of 4.9 million barrels. Later in the day, the Federal Reserve will release the minutes of its last policy meeting. We’ll also hear from two Fed members, Loretta Mester and James Bullard. On Thursday, the US releases Unemployment Claims, and Janet Yellen will deliver a speech at event in New York.

The Federal Reserve remains in the spotlight, although, one could argue, not for the right reasons. The markets have been treated to mixed messages from the US central bank, and this lack of communication is certainly not looked well upon the markets. Last week, the US dollar sustained broad losses, after Yellen delivered a surprisingly dovish speech in New York. The Fed chair spoke of the risks to the US economy from the global slowdown and poured cold water on speculation of an April rate hike. Prior to her speech, several Fed members issued hawkish comments, some going as far as calling for a rate hike at the April policy meeting. Analysts will be paying close attention to the Fed minutes later on Wednesday, looking for clues as to further rate projections. The markets are hoping the minutes will provide some clarity about the Fed’s monetary plans. If the minutes reinforce Yellen’s dovish take on the US economy and a rate hike is unlikely before the second half of the year, gold prices could drop sharply. Traders should be prepared for possible volatility in gold prices after the release of the minutes.

XAU/USD Fundamentals

Wednesday (April 6)

  • 10:30 US Crude Oil Inventories. Estimate +3.1M. Actual -4.9M
  • 12:20 US FOMC Member Loretta Mester Speaks
  • 14:00 US FOMC Meeting Minutes
  • 18:30 US FOMC Member James Bullard Speaks

Upcoming Key Events

Thursday (April 7)

  • 8:30 US Unemployment Claims. Estimate 271K
  • 17:30 US Fed Chair Janet Yellen Speaks

*Key releases are highlighted in bold

*All release times are DST

XAU/USD for Wednesday, April 6, 2016

XAU/USD April 6 at 12:20 DST

Open: 1230.85 Low: 1216.59 High: 1232.27 Close: 1225.80

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1169 1191 1205 1232 1255 1279
  • XAU/USD was flat in the Asian session. The pair lost ground in the European session but has reversed direction in North American trade
  • 1205 is providing support
  • 1232 was tested earlier in resistance and is a weak line
  • Current range: 1205 to 1232

Further levels in both directions:

  • Below: 1205, 1191 and 1169
  • Above: 1232, 1255, 1279 and 1303

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged. Long positions have a strong majority (61%), indicative of trader bias towards gold 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.