XAU/USD – Gold Surges, Retracts as Trump Victory Triggers Market Turmoil

Gold is almost unchanged on Wednesday, but the day has been anything but quiet. In the North American session, the metal is trading at $1275.77. The metal surged 5 percent in a tumultuous Asian session, but sharply reversed directions in the European and North American sessions. . On the release front, there are no major releases. US Crude Inventories posted a surplus of 2.4 million, well above the forecast of 1.3 million. On Thursday, the US will publish unemployment claims, with the estimate standing at 267 thousand.

As the markets begin to digest the idea of a President Donald J. Trump, the markets remain volatile on Wednesday and gold prices were no exception. The metal climbed as high as $1337, its highest level since late September, before retracting. Hillary Clinton was widely expected to cruise to the White House, as pundits and the American media gave Donald Trump little chance of winning (a Reuters release on Monday said that Clinton had a 90 percent  chance of winning). Trump’s upset election victory has stunned global markets, which are in turmoil on Wednesday as the unthinkable has become reality. The volatility that we’re seeing indicates that global markets were poorly positioned heading into the vote, overconfident that voters would reject Trump and hand Clinton a victory.

The news of a Trump election victory also shook up the odds of a December rate hike by the Federal Reserve. The odds dropped as low as 40 percent earlier in the day, but have recovered and actually increased. Currently, the markets have priced in at quarter-point hike at 76 percent, up from 71 percent just prior to the election. We could see further movement in the odds in the aftermath of the Trump victory, but it’s looking quite positive for a rate hike, which would mark the first rate move by the Fed since last December.

XAU/USD Fundamentals

Wednesday (November 9)

  • 10:00 US Final Wholesale Inventories. Estimate 0.2%. Actual 0.1%
  • 10:30 US Crude Oil Inventories. Estimate 1.3M. Actual 2.4 million
  • 13:01 US 10-year Bond Auction

Thursday (November 10)

  • 8:30 US Unemployment Claims. Estimate 267K

*All release times are EDT

*Key events are in bold

XAU/USD for Wednesday, November 9, 2016

XAU/USD November 9 at 13:00 EDT

Open: 1273.46 High: 1237.40 Low: 1268.71 Close: 1275.77

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1205 1223 1245 1279 1290 1307
  • XAU/USD posted sharp movement in the Asian session. The pair has retracted in the European and North American sessions, giving up all the earlier gains
  • 1245 is providing support
  • 1279 was tested earlier in resistance and is a weak line
  • Current range: 1245 to 1279

Further levels in both directions:

  • Below: 1245, 1223 and 1205
  • Above: 1279, 1290, 1307 and 1331

OANDA’s Open Positions Ratio

XAU/USD ratio has shown slight gains in long positions. Currently, long positions have a substantial majority (77%), indicative of trader bias towards XAU/USD 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.