XAU/USD – Gold Edges Lower, Markets Eye Durable Goods and Jobless Claims

Gold has posted slight losses in the Wednesday session. In North American trade, the metal is trading at a spot price of $1268.13 per ounce. On the release front, US New Home Sales dropped to 593 thousand, short of the forecast of 601 thousand. On Thursday, the US will release two key events – Core Durable Goods Orders and Unemployment Claims.

CB Consumer Confidence disappointed on Tuesday. The key indicator fell to 98.6 points in October, down from 104.1 points in the September report. This marked a 3-month low for the indicator. The disappointing reading could translate into lower consumer spending, which would likely put a crimp in the high-flying US dollar. Gold took advantage of the weak release and has touched a high of $1274 on Tuesday, close to 3-week highs.

With market anticipation of a US rate hike growing, the odds of a rate hike in December continue to rise. The CME Fed Watch has priced in a December rate hike at 72%. The prospect of a US rate hike for the first time in over a year has bolstered the US dollar against its rivals, including the Japanese yen. The US economy remains strong, buoyed by a labor market that is close to capacity, with unemployment at a healthy 5.0%. Inflation levels remain low and are unlikely to show much improvement in the next few months. Although the Fed would prefer stronger inflation levels, other economic indicators remain strong enough such that the lack of inflation is unlikely to be the critical factor in the Fed rate decision. The Fed will also hold a policy meeting in early November, but it’s unlikely to make any rate moves just before the US presidential election.

XAU/USD Fundamentals

Wednesday (October 26)

  • 8:30 US Goods Trade Balance. Estimate -60.6B. Actual -56.1B
  • 8:30 US Preliminary Wholesale Inventories. Estimate 0.1%. Actual 0.2%
  • 9:45 US Flash Services PMI. Estimate 52.4. Actual 54.8
  • 10:00 US New Home Sales. Estimate 601K. Actual 593K
  • 10:30 US Crude Oil Inventories. Estimate +0.7M. Actual -0.6M 

Upcoming Key Events

Thursday (October 27)

  • 8:30 US Core Durable Goods Orders. Estimate 0.2%
  • 8:30 US Unemployment Claims. Estimate 261K

*All release times are EDT

*Key events are in bold

 

XAU/USD for Wednesday, October 26, 2016

XAU/USD October 26 at 12:00 EDT

Open: 1274.35 High: 1276.53 Low: 1266.73 Close: 1268.13

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1199 1223 1245 1279 1307 1331
  • XAU/USD was flat in the Asian session. The pair has posted small losses in the European and North American sessions.
  • 1245 is providing support
  • 1279 is a weak resistance line
  • Current range: 1245 to 1279

Further levels in both directions:

  • Below: 1245, 1223 and 1199
  • Above: 1279, 1307 and 1331

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Wednesday session. Long positions command a substantial majority (72%), 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.