XAU/USD – Gold Jumpy as Markets Eye FOMC Minutes

Gold has shown some movement in both directions on Wednesday, but is almost unchanged on the day. In the North American session, spot gold is trading at $1223.31 per ounce. Today’s highlight is the release of the FOMC minutes from the June policy meeting. Thursday promises to be busy, with the release of three key events – ADP Nonfarm Payrolls, unemployment claims, and the ISM Non-Manufacturing PMI.

Gold prices have steadied since Monday, when the metal dropped 1.5%, falling to 7-week lows. However, traders should be prepared for some volatility in today’s North American session with the release of the Federal Reserve minutes. As gold is inversely linked to higher interest rates, the direction the metal takes depends on the tone of the minutes. Traders should keep a close eye on the minutes, which could prove to be a market-mover. Will policymakers reiterate the upbeat sentiment of the rate statement? If yes, the dollar could climb, as it did after the rate statement, and gold prices head lower.

Federal Reserve policymakers have consistently projected one final rate hike in 2017, but the markets remain lukewarm about the prospects of a rate increase. The odds of a December rate hike are pegged at only 50%, while the likelihood of an increase in September is just 18%. The US economy slowed down in the first quarter, and there are signs that Q2 will also be soft. Consumer spending, which comprises two-thirds of US economic growth, remains soft. Another sore point in the economy is inflation, which remains below the Fed’s target of 2%. In June, Fed Chair Janet Yellen shrugged off inflation worries, saying that she expected inflation to remain soft due to temporary factors. Other Fed policymakers have also focused on positives in the economy, such as the strong labor market, a boost in exports and high consumer confidence.

 

XAU/USD Fundamentals

Wednesday (July 5)

  • 10:00 US Factory Orders. Estimate -0.5%. Actual -0.8%
  • 14:00 FOMC Meeting Minutes

Thursday (July 6)

  • 8:15 US ADP Non-Farm Employment Change. Estimate 184K
  • 8:30 US Unemployment Claims. Estimate 243K
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 56.5

*All release times are EDT

*Key events are in bold

 

XAU/USD for Wednesday, July 5, 2017

XAU/USD July 5 at 12:40 EST

Open: 1223.32 High: 1228.94 Low: 1217.22 Close: 1222.92

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1146 1170 1199 1232 1260 1285
  • XAU/USD edged higher in the Asian session. The pair retracted in the European session and has edged higher in North American trade
  • 1199 is providing support
  • 1232 is the next resistance line
  • Current range: 1199 to 1232

Further levels in both directions:

  • Below: 1199, 1170 and 1146
  • Above: 1232, 1260, 1285 and 1307

OANDA’s Open Positions Ratio

XAU/USD ratio is showing slight gains in long positions. Currently, long positions have a majority (73%), indicative of XAU/USD breaking out 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.