Gold Drops to 5-Week Low as Dudley Sends Hawkish Message

Gold has started the new trading week with losses. In North American trade,  XAU/USD is down 0.49%, with spot gold trading at $1248.74 per ounce. On the release front, there are no economic indicators. The sole events on the schedule are comments from FOMC members William Dudley and Charles Evans.

Gold prices dipped last week after the Fed’s hawkish rate statement, and the metal has started the week with losses, again courtesy of the FOMC. Earlier in the day, Federal Reserve of New York President Charles Dudley cautioned the Fed against halting its current tightening cycle. Dudley said that the economy was performing well, and reiterating the sentiment expressed in the rate statement, Dudley said that he was not concerned with inflation levels, which are at 1.5 percent (well below the Fed’s target of 2.0%). Dudley’s upbeat remarks have boosted the dollar and have pushed gold prices to their lowest level since May 15.

Friday’s US releases were a disappointment, as construction and consumer confidence reports missed expectations. Building Permits dropped to 1.17 million, its lowest level since August 2016. Housing Starts were also week, as the reading of 1.09 million marked the lowest since November 2016. There is concern that the soft construction numbers could weigh on second-quarter growth. There was more bad news from UoM Consumer Sentiment, which dipped to 94.7 in May, marking a 7-month low. This is significant, as it is the indicator’s lowest reading since President Trump took office, and points to consumer unease with how the US economy is being handled. There are troubling signs that the June UoM report could be even lower, coming after the Comey testimony which has damaged Trump’s credibility even further.

 

XAU/USD Fundamentals

Monday (June 19)

  • 8:00 US FOMC Member William Dudley Speaks
  • 19:00 US FOMC Member Charles Evans Speaks

*All release times are EDT

*Key events are in bold

 

XAU/USD for Monday, June 19, 2017

XAU/USD June 15 at 12:50 EST

Open: 1254.45 High: 1255.82 Low: 1247.41 Close: 1248.41

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1170 1199 1232 1260 1285 1307
  • XAU/USD posted slight losses in the Asian and European sessions. The pair is steady in North American trade
  • 1232 is providing support
  • 1260 is the next resistance line
  • Current range: 1232 to 1260

Further levels in both directions:

  • Below: 1232, 1199 and 1170
  • Above: 1260, 1285, 1307 and 1337

OANDA’s Open Positions Ratio

In the Monday ratio, XAU/USD ratio is showing long positions with a majority (58%). This is indicative of XAU/USD reversing directions and climbing 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.