XAU/USD – Gold Rises to $1160 Level, US Manufacturing PMI Improves

Gold has moved higher on Tuesday session. In North American trade, the spot price for one ounce is $1160.41. On the release front, ISM Manufacturing PMI rose to 54.7 points. On Wednesday, the Federal Reserve will publish the minutes of its last policy meeting.

Strong US economic expansion in the fourth quarter was not good news for gold, as investors have shown more appetite for risk. Gold prices plunged 12.5% in Q4, as investors showed a greater appetite for risk. There could be more trouble ahead for gold in early 2017, as strong economic growth could lead to another rate hike in the next few months. As gold moves inversely to interest rate  hikes, higher rates would likely send gold to lower levels.

The spotlight will be on the Federal Reserve on Wednesday, with the release of the minutes from the December policy meeting, when the Fed finally raised rates for the first time since December 2015. Analysts will be combing through the minutes, looking for clues regarding future monetary policy. The US economy is performing very well, and the markets are hopeful that this continues as Donald Trump takes office. Trump’s economic policies remain sketchy, although he has promised to increase fiscal spending while lowering taxes. If the economy’s positive momentum continues in early 2017, the Fed could be inclined to raise rates another quarter point in order to prevent the economy from overheating. A rate hike would likely lead to broad gains for the US dollar.

Dollar Finds its Mojo

XAU/USD Fundamentals

Tuesday (January 3)

  • 9:45 US Final Manufacturing PMI. Estimate 54.2. Actual 54.3
  • 10:00 US ISM Manufacturing PMI. Estimate 53.7. Actual 54.7
  • 10:00 US Construction Spending. Estimate 0.5%. Actual 0.9%
  • 10:00 US ISM Manufacturing Prices. Estimate 55.6. Actual 65.5

Wednesday (January 4)

  • 14:00 US FOMC Meeting Minutes

*All release times are EST

* Key events are in bold

XAU/USD for Tuesday, January 3, 2017

XAU/USD January 3 at 12:15 EST

Open: 1150.34 High: 1164.59 Low: 1146.02 Close: 1160.41

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1111 1130 1146 1174 1199 1232
  • XAU/USD posted gains in the Asian session but retracted in European trade. The pair has rebounded with sharp gains in the North American session
  • 1146 is providing support
  • 1174 is the next resistance line
  • Current range: 1146 to 1174

Further levels in both directions:

  • Below: 1146, 1130, 1111 and 1076
  • Above: 1174, 1199 and 1232

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Tuesday session. Currently, long positions command a strong majority (81%). This is indicative of trader bias towards XAU/USD continuing to climb 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.