XAU/USD – Gold Under Pressure as Fed Rate Hike Imminent

Gold prices has edged up in the Monday session. In the North American session, the metal is trading at $1211.84. On the release front, it’s a quiet start to the week, with no US events on the schedule. With the odds of a Fed rate hike in December approaching 100 percent, gold remains under pressure, as the metal tends to move inversely to rate movements.

Gold Recovering After USD Cools Down

US key indicators were generally strong on Thursday, pointing to a strong economy. Unemployment Claims sparkled at 235 thousand, much lower than the estimate of 257 thousand. This marked the lowest weekly claims total since 1973. CPI matched expectations at 0.4%, but Core CPI came in at 0.1% shy of the estimate of 0.2%.  The Philly Fed Manufacturing Index dropped to 7.6 points, short of the forecast. On the housing front, Housing Starts remained unchanged at 1.23 million, above expectations.

Gold prices slipped on Thursday, following Fed Chair Yellen’s appearance before a congressional committee. Yellen did not explicitly acknowledge that the Fed would raise rates at the December 13-14 policy meeting, but she did say that the rate hike would be “relatively soon”. Yellen make no mention of Donald Trump’s potential policies, which could include greater fiscal spending, as she reiterated that future rate hikes should be “gradual”. Commenting on Yellen’s testimony, Jonathan Wright, a former Fed economist, summed up market sentiment –  “a rate hike in December is a done deal, barring a significant surprise in the next jobs numbers or in financial markets”.

XAU/USD Fundamentals

Monday (November 21)

  • There are no US releases on the schedule

*All release times are EST

*Key events are in bold

XAU/USD for Monday, November 21, 2016

XAU/USD November 21 at 12:10 EST

Open: 1206.23 High: 1217.77 Low: 1206.21 Close: 1211.84

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1146 1174 1205 1223 1245 1279
  • XAU/USD posted slight gains in the Asian and European sessions. The pair has shown limited movement in North American trade
  • 1205 is a weak support line
  • There is resistance at 1223
  • Current range: 1205 to 1223

Further levels in both directions:

  • Below: 1205,1174 and 1146
  • Above: 1223, 1245, 1279 and 1290

OANDA’s Open Positions Ratio

In the Monday session, XAU/USD ratio is showing long positions with a substantial majority (79%). This is indicative of trader bias towards XAU/USD continuing to move to higher levels.

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.