XAU/USD – Gold Edges Lower as CB Consumer Confidence Sparkles

Gold has edged lower on Tuesday, as the metal trades at $1317.63 in the North American session. On the release front, CB Consumer Confidence jumped to 101.4 points, easily beating the forecast. On Wednesday, the US will release two key events – ADP Nonfarm Employment Change and Pending Home Sales.

The US consumer remains optimistic about the US economy, according to a key consumer confidence survey. CB Consumer confidence jumped to 1o1.1 points in August, above the forecast of 99.7 points. It marked the indicator’s highest level since September 2015. Recent consumer sentiment indicators have been steady, and if the optimism extends to actual consumer spending, we could see the odds of a rate hike in September or December increase.

The highlight of the Jackson Hole meeting late last week was Janet Yellen’s speech on Friday. The Fed chair’s message to the markets was clearly upbeat, as she said that the case for a rate increase had “strengthened in recent months”. Yellen noted that the economy was close to maximum employment, inflation was steady, and consumer spending remained solid. At the same time, Yellen did not provide any timeline on a rate hike nor did she spell out what the Fed wants to see before pressing the rate trigger. On Friday, Fed members Dennis Lockhart and Stanley Fischer both came out in favor of two rate hikes in 2016. The Fed’s stance has raised the odds of a rate move according to the CME Group FedWatch tool, with a September hike priced at 30% in September and 57% for a December hike. However, given that any move by the Fed will be data-dependent, US numbers ahead of the Fed policy meeting on September 21 could significantly change the rate outlook.

XAU/USD Fundamentals

Tuesday (August 30)

• 9:00 US S&P/CS Composite-20 HPI. Estimate 5.1%. Actual 5.1% 
• 10:00 US CB Consumer Confidence. Estimate 97.2. Actual 101.1

Wednesday (August 31)

• 8:15 US ADP Non-Farm Employment Change. Estimate 173K
• 10:00 US Pending Home Sales. Estimate 0.7%

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Tuesday, August 30, 2016

XAU/USD August 30 at 10:30 EDT

Open: 1323.85 High: 1325.52 Low: 1317.20 Close: 1318.37

XAU/USD Technical

• XAU/USD was flat in the Asian session. The pair has posted small gains in the European and North American sessions
• There is resistance at 1331
• 1307 is providing support
• Current range: 1307 to 1331

Further levels in both directions:

• Below: 1307, 1279 and 1245
• Above: 1331, 1361, 1388 and 1416

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged on Tuesday, consistent with the lack of movement from XAU/USD. Long positions have a strong majority (66%), indicative of trader bias towards XAU/USD breaking out 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.