XAU/USD – Gold Edges Lower, Fed Rate Speculation Continues

Gold has recorded modest losses on Tuesday, as the metal trades at a spot price of $1323.30 per ounce in the North American session. On the release front, it’s another quiet day, with no major events on the schedule. NFIB Small Business Index came in at 94.4 points, short of the forecast of 94.9 points.

With a September rate hike still on the table, the markets have been paying close attention to comments from FOMC members in connection with the Fed’s monetary policy. On Monday, FOMC member Lael Brainard sounded cautious, saying it would be prudent to maintain a loose monetary policy. Brainard noted global uncertainties and weak inflation as reasons for the Fed not to rush into raising rates. This dovish message was in marked contrast to remarks from FOMC member Eric Rosengren on Friday, who came out in support of a rate hike, without providing a timeline. Rosengren said that “tightening is likely to be appropriate”, and went as far as to say that the US economy could overheat if the Fed didn’t act soon. These mixed messages certainly haven’t clarified matters, leaving markets players in the dark as to the Fed’s monetary plans with a week to go before a crucial Fed policy meeting. However, they have led to plenty of movement in the odds of a rate hike, which moved higher after Rosengren’s speech, only to drop following Brainard’s comments. The likelihood of a September hike has dipped to 15%, while the odds of a December rate are down to 45%. The markets will have few fundamental cues to work with until Thursday and Friday, when the US will release retail sales, CPI and consumer confidence numbers. If these numbers are stronger than expected, the odds of a rate hike next week will likely increase, and this could push gold prices even lower.

XAU/USD Fundamentals

Tuesday (September 13)

  • 6:00 US NFIB Small Business Index. Estimate 94.9. Actual 94.4
  • 13:01 US 30-year Bond Auction
  • 14:00 US Federal Budget Balance. Estimate -98.0B

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Tuesday, September 13, 2016

XAU/USD September 13 at 13:10 EDT

Open: 1329.76 High: 1332.02 Low: 1319.17 Close: 1321.39

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1245 1279 1307 1331 1361 1388
  • XAU/USD was flat in the Asian session. The pair has posted small losses in the European and North American sessions
  • 1307 is providing support
  • There is resistance at 1331
  • 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. Currently, long positions have a strong majority (68%), indicative of trader bias towards XAU/USD 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.