Gold Pushes Higher as Dollar Sags

Gold has jumped on the bandwagon, as the US dollar is broadly lower in the Monday session. In North American trading, the spot price for an ounce of gold is $1295.12, up 0.52% on the day. Gold pushed above the $1299 line earlier in the day, its highest level since October 16. On the release front, New Home Sales surged to 687 thousand, well above the estimate of 627 thousand. On Tuesday, the US releases CB Consumer Confidence, with an estimate of 123.9 points. As well, Federal Reserve Chair Designate Jerome Powell will testify before a Congressional committee.

Federal Reserve policymakers remain upbeat about the U.S economy, according to the minutes of the most recent policy meeting. The minutes indicated that policymakers expected the U.S economy to continue showing strong growth, and predicted that interest rates will be raised in the “near term”. The members discussed the vexing question of why inflation has been persistently low (no quick-fix solution was provided), with most agreeing that a tight labor market should lead to higher inflation levels. Although policymakers did not provide further hints about the timetable of a rate hike, the markets remain convinced that additional rates are imminent. The odds of a rate hike in December are 93%, and the odds of a January raise are at 91%.

All eyes will be on Jerome Powell, who testifies before the Senate Banking Committee on Tuesday for his confirmation hearing. Will Powell be a clone of outgoing chair Janet Yellen? Powell inherits an economy that is in excellent shape, but persistently low inflation remains a nagging problem. Fed policymakers have differing views on what to do about inflation, with some members proposing that the Fed drop its 2 percent target, in favor of a “gradually rising path” for prices. The Fed remains confounded by low inflation and wage growth, despite a labor market that is at full capacity. Still, the Fed will likely pull the rate trigger next month, and could raise rates up to 3 more times in 2018 if the economy continues to expand at its current pace.

XAU/USD Fundamentals

Monday (November 27)

  • 10:00 US New Home Sales. Estimate 627K. Actual 685K
  • 17:30 US FOMC Member Neel Kashkari Speaks
  • 19:00 US FOMC Member William Dudley Speaks

Tuesday (November 28)

  • 10:00 US CB Consumer Confidence. Estimate 123.9
  • 10:00 Fed Chair Designate Jerome Powell Speaks
  • 15:45 US Treasury Secretary Steven Mnuchin Speaks

*All release times are GMT

*Key events are in bold

 

XAU/USD for Monday, November 27, 2017

XAU/USD November 27 at 11:15 EST

Open: 1288.46 High: 1299.33 Low: 1286.79 Close: 1295.12

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1240 1260 1285 1307 1337 1367
  • XAU/USD ticked higher in the Asian session and posted considerable gains in European trade. The pair is steady in North American trade
  • 1285 is a weak support line
  • 1307 is the next resistance line
  • Current range: 1285 to 1307

Further levels in both directions:

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

OANDA’s Open Positions Ratio

In the Monday session, XAU/USD ratio is showing long positions with a majority (67%). This is indicative of trader bias towards XAU/USD 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.