XAU/USD – Gold Shrugs Off Sharp US Retail Sales

Gold prices are subdued on Tuesday, following losses in the Monday session. In the North American session, the metal is trading at $1224.03. On the release front, US Retail Sales and Core Retail Sales posted identical gains of 0.8 percent, as both indicators beat their estimates. The Empire State Manufacturing Index gained 1.5 points, beating the forecast of -1.5. On Wednesday, the US will publish PPI.

The US dollar has looked sharp since the Trump election win last week, a stunning result which caused turmoil in the global markets. Gold prices have suffered, sliding 4.8 percent last week. Market sentiment is currently very favorable towards the dollar, as a Trump presidency (together with a Republican-controlled Congress) could signal a looser fiscal policy and a cut in taxes. This would likely result in greater inflation, which would lead to higher interest rates and hence a stronger dollar. At the same time, Donald Trump remains a political enigma, and aside from being “pro-business”, he has been very short on specifics with regard to an economic platform. This lack of certainty means we could be in for plenty of surprises from President Trump, which could translate into volatility in the currency and commodity markets.

With the Federal Reserve setting interest rates in less than a month, expectations are high that the Fed will press the trigger and raise rates by a quarter-point for the first time in a year. There have been several false starts before, but this time should be different. The Fed has sent out strong signals that it will raise rates in December, and in the past two rate decisions, some FOMC members voted for an immediate rate hike. The odds of a rate rise currently stand at an impressive 86 percent, so barring some sudden negative data, we appear headed for a rate hike before the end of 2016.

XAU/USD Fundamentals

Tuesday (November 15)

  • 8:30 US Core Retail Sales. Estimate 0.5%. Actual 0.8%
  • 8:30 US Retail Sales. Estimate 0.6%. Actual 0.8%
  • 8:30 US Empire State Manufacturing Index. Estimate -1.5. Actual 1.5
  • 8:30 US Import Prices. Estimate 0.4%
  • 9:05 US FOMC Member Daniel Tarullo Speech
  • 10:00 US Business Inventories. Estimate 0.2%
  • 13:30 US FOMC Member Stanley Fischer Speech

Wednesday (November 16)

  • 8:30 US PPI. Estimate 0.3%

*All release times are EST

*Key events are in bold

XAU/USD for Tuesday, November 15, 2016

XAU/USD November 15 at 12:15 EST

Open: 1223.60 High: 1231.67 Low: 1218.64 Close: 1224.03

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1174 1205 1223 1245 1279 1290
  • XAU/USD has been flat in the Tuesday session
  • 1223 was tested earlier in support and remains under strong pressure
  • There is resistance at 1245
  • Current range: 1223 to 1245

Further levels in both directions:

  • Below: 1223, 1205 and 1174
  • Above: 1245, 1279, 1290 and 1307

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Tuesday 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.