XAU/USD – Gold Posts Gains as US Inflation Levels Dip

Gold has posted slight gains on Tuesday. In the North American session, gold is trading at $1346.97. On the release front, it was a busy day in the US. CPI posted a flat reading of 0.0%, while Core CPI gained 0.1%. Building Permits came in at 1.15 million, very close to the forecast. On Wednesday, the FOMC will publish the minutes of its July policy meeting.

In the US, inflation numbers remain stuck at low levels. CPI, the primary gauge of consumer inflation, came in at 0.0%, matching the forecast. This marked the first time the key index has failed to post a monthly gain since February, and will raise concerns of deflation in the economy. Core CPI posted a negligible gain of 0.1%, shy of the estimate of 0.2%. This disappointing inflation data, which comes on the heels of soft retail sales reports, makes it very unlikely that the Fed will raise rates in September. Strong employment numbers, led by a stellar NFP report, had raised the odds of a September hike. The Fed has made it clear that any decision to raise rates will be data dependent, so it’s hard to see a case for a rate hike next month, with inflation levels close to zero. This means that we can expect the Federal Reserve to remain on the sidelines until December or even later. The markets will give the FOMC minutes a careful read, but the minutes could well be a non-event, as the Fed didn’t make a move at the July policy meeting. Still, gold prices are sensitive to interest rate movements, so any hints about the possibility of a rate hike could push gold prices lower.

XAU/USD Fundamentals

Tuesday (August 16)

  • 8:30 US Building Permits. Estimate 1.16M. Actual 1.15M
  • 8:30 US CPI. Estimate 0.0%. Actual 0.0%
  • 8:30 US Core CPI. Estimate 0.2%. Actual 0.1%
  • 8:30 US Housing Starts. Estimate 1.18M. Actual 1.21M
  • 9:15 US Capacity Utilization Rate. Estimate 75.7%. Actual 75.9%
  • 9:15 US Industrial Production. Estimate 0.2%. Actual 0.7%

Wednesday (August 17)

  • 14:00 US FOMC Meeting Minutes

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Tuesday, August 16, 2016

XAU/USD August 16 at 13:00 EDT

Open: 1341.08 High: 1358.11 Low: 1340.58 Close: 1346.97

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1279 1307 1331 1361 1388 1416
  • XAU/USD recorded slight gains in the Asian and European sessions. The pair has reversed directions and moved lower in North American trade
  • There is resistance at 1361
  • 1331 is providing support
  • Current range: 1331 to 1361

Further levels in both directions:

  • Below: 1331, 1307 and 1279
  • Above: 1361, 1388, 1416 and 1447

OANDA’s Open Positions Ratio

XAU/USD ratio is almost unchanged on Tuesday. Long positions command a strong majority (62%), indicative of trader bias towards XAU/USD continuing to move 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.