Gold Shrugs as Durable Goods Sparkles

Gold is unchanged in the Wednesday session. In North American trade, the spot price for an ounce of gold is $1276.71, up 0.01% on the day. On the release front, US numbers impressed as durable goods orders accelerated in September. Core Durable Goods Orders gained 0.7%, above the estimate of 0.5%. Durable Goods Orders soared 2.2%, crushing the estimate of 1.0%. As well, New Home Sales jumped to 667 thousand, well above the forecast of 555 thousand. On Thursday, the US releases unemployment claims and Pending Home Sales.

Gold prices remain steady this week, after the metal slipped 1.9 percent last week. The sharp drop was in response to solid data last week, as employment, manufacturing and housing data beat their estimates. On Friday, the US releases Advance GDP for the third quarter, and the markets are expecting a strong gain of 2.5 percent. If the GDP reading is not within expectations, we could see some strong movement in gold prices.

Who will take over at the Federal Reserve? The markets are keeping close tabs on the central bank, as Janet Yellen’s 3-year term expires in February. President Trump has said he will nominate a new Fed head in the coming days, and the front runners are economist John Taylor, Federal Reserve Governor Jerome Powell, and Yellen. Taylor advocates a rule in which interest rates could be as high as 3 percent, given current economic conditions. Powell is more closely aligned to Fed Chair Janet Yellen’s monetary stance which advocates an incremental increase in rates. With the two candidates representing sharply differing views on interest rate levels, Trump’s choice for the new Fed chair could have an effect on monetary policy and the strength of the US dollar. Still, most economists are of the view that monetary policy will be largely driven by the performance of the US economy. Inflation levels remain weak and may not reach Fed’s target of 2 percent before 2020, but that has not dampened expectations of a December rate hike. According to CME FedWatch, the odds of a raise in December stand at 96 percent.

 

XAU/USD Fundamentals

Wednesday (October 25)

  • 8:30 US Core Durable Goods Orders. Estimate 0.5%. Actual 0.7%
  • 8:30 US Durable Goods Orders. Estimate 1.0%. Actual 2.2%
  • 9:00 US HPI. Estimate 0.4%. Actual 0.7%
  • 10:00 US New Home Sales. Estimate 555K. Actual 667K
  • 10:30 US Crude Oil Inventories. Estimate -2.6M

Thursday (October 26)

  • 8:30 US Unemployment Claims. 235K
  • 10:00 US Pending Home Sales. Estimate 0.2%

*All release times are GMT

*Key events are in bold

 

XAU/USD for Wednesday, October 25, 2017

XAU/USD October 25 at 12:20 EST

Open: 1276.77 High: 1279.35 Low: 1271.09 Close: 1276.71

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1213 1240 1260 1285 1307 1337
  • XAU/USD edged lower in the Asian session. The pair showed little movement in European trade and has posted gains in the North American session
  • 1260 is providing support
  • 1285 is the next resistance line
  • Current range: 1260 to 1285

Further levels in both directions:

  • Below: 1260, 1240 and 1213
  • Above: 1285, 1307, 1337 and 1367

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Wednesday session. Currently, long positions have a majority (66%), indicative of trader bias towards XAU/USD breaking out and moving to higher ground.

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.