XAU/USD – Gold Unmoved in Thin Trade

Gold is almost unchanged in the Wednesday session. In North American trade, the spot price for one ounce stands at $1138.76. On the release front, Pending Home Sales posted a sharp decline of 2.5%, well off the estimate of a 0.6% gain. On Thursday, the US will release Unemployment Claims, with an estimate of 277 thousand.

As 2016 wraps up, US consumers are brimming with confidence, in what analysts are describing as a post-election surge in optimism. The CB Consumer Confidence report surged in December to 113.7, its highest level since August 2001. This reading comes on the heels of UoM Consumer Sentiment, which climbed to a 12-year high, with a reading of 93.8 points. Clearly, consumers are optimistic that the economy will continue to improve under Donald Trump. Both of these well-respected surveys found that consumers are confident that continuing economic growth will create new jobs and raise incomes. Trump’s economic platform remains short on details, but he has promised to cut taxes while increasing public spending. If Trump manages to implement both of these goals, the US economy could heat up and also help global growth pick up speed. In late November, the OECD revised upwards its 2017 growth projections for the US from 2.1% to 2.3%.

The US economy continues to impress, as underscored by the most recent revision to third quarter GDP. The Final GDP reading of 3.5% beat the estimate of 3.3%. This figure marked an upward revision of the previous GDP estimate of 3.2%. The stellar reading can be attributed to stronger consumer spending and an increase in business investment, and marked the strongest growth rate since the third quarter of 2015. With consumer confidence at high levels and the labor market close to capacity, fourth quarter GDP readings could follow suit with strong numbers.

XAU/USD Fundamentals

Wednesday (December 28)

• 10:00 US Pending Home Sales. Estimate +0.6%. Actual -2.5%

Thursday (December 29)

• 8:30 US Unemployment Claims. Estimate 277K
• 11:00 US Crude Oil Inventories

*All release times are EST

*Key events are in bold

XAU/USD for Wednesday, December 28, 2016

XAU/USD December 28 at 12:00 EST

Open: 1139.35 High: 1144.55 Low: 1136.47 Close: 1138.76

XAU/USD Technical

• XAU/USD posted small gains in the Asian session but gave up these gains in the European session. The pair has been flat in North American trade
• 1130 is providing support
• 1146 is the next resistance line
• Current range: 1130 to 1146

Further levels in both directions:

• Below: 1130, 1111, 1076 and 1043
• Above: 1146, 1174 and 1199

OANDA’s Open Positions Ratio

XAU/USD ratio remains unchanged in the Wednesday session. Currently, long positions command a substantial majority (79%). This is indicative of trader bias towards XAU/USD breaking out and climbing to higher levels.

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