XAU/USD – Gold Slump Continues as Dollar Rolls, Odds of Fed Hike Jumps

Gold prices are lower on Monday, following sharp losses in the Friday session. In the North American session, the metal is trading at $1222.10. On the release front, it’s a quiet start to the week, with no US events on the schedule. On Tuesday, the US will release key retail sales numbers.

The turmoil which continues to affect the markets has sent gold sharply lower. Last week, gold plunged 4.9 percent, its sharpest weekly drop in 2016. As the dust begins to settle after the stunning US election results, investors and traders are asking what will a Trump election mean for the markets. Like much of his agenda, Trump’s economic platform is unclear. According to Bank of America Merrill Lynch, given that both houses of Congress are under Republican control, we could see Trump opt to loosen fiscal policy. This would lead to greater spending, causing more inflation. In turn, interest rates would move higher and bolster the US dollar. However, Trump remains an enigma, having never held public office. His ideology is unclear (if he has one), so the markets could be in for a period of uncertainty, at least in the early stages of the Trump administration. This could lead to prolonged volatility in the currency markets. As far as monetary policy is concerned, the odds of a rate hike in December also showed some volatility immediately after the election, but have jumped to a remarkable 85 percent, as all signs point to the first Fed hike since last December.

XAU/USD Fundamentals

Monday (November 14)

  • There are no US events on the schedule

Tuesday (November 15)

  • 8:30 US Core Retail Sales. Estimate 0.5%
  • 8:30 US Retail Sales. Estimate 0.6%

*All release times are EDT

*Key events are in bold

XAU/USD for Monday, November 14, 2016

XAU/USD November 14 at 13:40 EDT

Open: 1276.09 High: 1292.32 Low: 1258.789 Close: 1266.73

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1205 1223 1245 1279 1290 1307
  • XAU/USD posted losses in the Asian session. The pair has shown limited movement in the European and North American sessions
  • 1245 is providing support
  • There is resistance at 1279
  • 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 is unchanged in the Monday session. Currently, long positions have a substantial majority (75%), indicative of trader bias towards XAU/USD reversing directions and 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.