XAU/USD – Gold Dips as GDP, Consumer Confidence Climb

Gold has reversed directions on Tuesday and lost ground, erasing the gains from the Monday session. In North American trade, the spot price for one ounce of gold is $1187.75. On the release front, US data was impressive. Preliminary GDP sparkled in the third quarter, as the economy expanded 3.2%, above the forecast of 3.0%. The 3.2% gain was an upwards revision of Advance GDP, which came in at 2.9%. CB Consumer Confidence jumped to 107.1 points, crushing the estimate of 101.7 points. On Wednesday, US, key employment indicators kick off with the release of ADP Nonfarm Employment Change. The markets are expecting a strong improvement, with an estimate of 161 thousand.

US Q3 GDP Revised Upward on Consumer Spending

Solid consumer confidence numbers have been a critical factor in the US recovery, as an optimistic consumer is likely to go out and spend money. CB Consumer Confidence jumped to 107.1 points in November, surpassing the 100-level for the third time in four months. Last week, UoM Consumer Sentiment jumped to 93.8 points, its highest level since May. Donald Trump’s surprise election victory has not had an adverse effect on consumer confidence, and if these rosy numbers translate into stronger consumer spending, the US dollar could continue to climb against its rivals.

The markets are virtually certain that the Fed will raise interest rates a quarter-point in December, with the odds of a rate hike at 93 percent. The Fed minutes were released on Thursday, indicating that policymakers felt it appropriate to raise rates “relatively soon”. Earlier this month, Fed Chair Janet Yellen used the same phrase in her testimony before a congressional committee. The minutes indicated that some members argued that the Fed needs to raise rates in December in order to preserve the bank’s credibility – despite some broad hints of rate hikes during 2016, the Fed has stayed on the sidelines throughout 2016, causing significant disappointment and frustration in the markets.

XAU/USD Fundamentals

Tuesday (November 29)

  • 8:15 US FOMC Member William Dudley Speech
  • 8:30 US Preliminary GDP. Estimate 3.0%. Actual 3.2%
  • 8:30 US Preliminary GDP Price Index. Estimate 1.5%. Actual 1.4% 
  • 9:00 US S&P/CS Composite-20 HPI. Estimate 5.3%. Actual 5.1%
  • 10:00 US CB Consumer Confidence. Estimate 101.3 points. Actual 107.1
  • 12:40 US FOMC Member Jerome Powell Speech

Wednesday (November 30)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 161K

XAU/USD for Tuesday, November 29, 2016

XAU/USD November 29 at 12:55 EST

Open: 1194.65 High: 1195.04 Low: 1181.02 Close: 1187.75

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1130 1146 1174 1205 1223 1245
  • XAU/USD posted slight losses in the Asian and European sessions but has reversed directions in North American trade
  • 1174 is a support line
  • There is resistance at 1205
  • Current range: 1174 to 1205

Further levels in both directions:

  • Below: 1174, 1146 and 1130
  • Above: 1205, 1223, 1245 and 1279

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Tuesday session. Currently, long positions have a substantial majority (76%). This is indicative of trader bias towards XAU/USD reversing directions and moving 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.