Gold Unchanged, US Retail Sales, PPI Next

Gold is subdued on Tuesday, following solid gains in the Monday session. Gold is trading at a spot price of $1256.08 an ounce in the North American session. On the release front, there are no major US indicators on the schedule. The NFIB Small Business Index beat expectations, while Import Prices missed the estimate. On Wednesday, there are three key releases – Core Retail Sales, Retail Sales and PPI.

Gold prices remain at 3-week highs, as the base metal has jumped 3.5 percent since March 28. Gold has been bolstered by recent dovish Fed statements as well the Fed minutes, which were dovish and dampened any expectations of a rate hike in April. Higher US interest rates make the dollar more attractive versus other assets such as gold, so if rates remain the same, it is bullish for gold.

The Federal Reserve remains under the microscope, as the markets try to forecast what the Fed has in mind regarding future rate hikes. Recent hawkish statements from several Fed members had raised expectations about a rate hike in April, but Fed chair Janet Yellen responded with a dovish assessment of the US economy, dampening such speculation. Last week, Yellen acknowledged that although domestic growth was steady, the US economy remained prone to risks due to turbulent conditions in the global economy. New York Federal Reserve president William Dudley reiterated Yellen’s message, saying that the Fed must approach future rate hikes with caution. As well, the Fed released the minutes of its March policy meeting last week, and the tone was more dovish than expected, although some members did express support for an April hike. The minutes also pointed to a split as to whether the recent pickup in inflation will continue. Higher inflation levels would increase the likelihood of a rate hike in June. Most analysts are expecting no more than two rate hikes in 2016, although stronger than expected economic data could change this forecast.

XAU/USD Fundamentals

Tuesday (April 12)

  • 6:00 US NFIB Small Business Index. Estimate 93.9. Actual 92.6
  • 8:30 US Import Prices. Estimate 1.0%. Actual 0.2%
  • 14:00 US Federal Budget Balance. Estimate -106.5B

Upcoming Key Events

Wednesday (April 13)

  • 8:30 US Core Retail Sales. Estimate 0.4%
  • 8:30 US PPI. Estimate 0.3%
  • 8:30 US Retail Sales. Estimate 0.1%

*Key releases are highlighted in bold

*All release times are DST

XAU/USD for Tuesday, April 12, 2016

XAU/USD April 12 at 12:10 DST

Open: 1257.26 Low: 1251.16 High: 1262.77 Close: 1256.08

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1205 1232 1255 1279 1303 1331
  • XAU/USD was flat in the Asian session. The pair posted gains in the European session but has retracted in North American trade
  • There is resistance at 1279
  • 1255 was tested earlier in support and is under pressure. This line could break in the North American session
  • Current range: 1255 to 1279

Further levels in both directions:

  • Below: 1255, 1232, 1205 and 1191
  • Above: 1279, 1303 and 1331

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged, consistent with the lack of movement from XAU/USD. Long positions command a strong majority (59%), which is indicative of trader bias towards gold breaking out 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.