Gold Shoots Higher on Fed Statement

Gold has steadied on Friday, following sharp gains a day earlier, as the metal barreled above the $1300 level. In Friday’s European session, the spot price stands at $1308.20 per ounce. On Thursday, there was good news on the release front, as US Unemployment Claims and the Philly Fed Manufacturing Index beat their estimates.

There was positive economic news out of the US on Thursday, as Unemployment Claims dipped to 312 thousand last week, beating the estimate of 316 thousand. As well, the Philly Fed Manufacturing Index, which has been on the upswing for most of 2014, continued the trend and improved to 17.8 points, crushing the estimate of 14.3. This was the index’s strongest reading since last August, and points to a manufacturing sector which is expanding in order to keep up with increasing demand.

The Federal Reserve continued to trim its QE program on Wednesday, reducing the scheme by $10 billion, to $35 billion/month. If all goes as planned, the Fed could wind up QE in the fall. The Fed also hinted that interest rates will continue to stay low for the foreseeable future, which likely means that we won’t see any rate hikes before the first quarter of 2015. With regard to economic activity, the Fed noted that the recovery is continuing, but it reduced its forecast of economic growth to 2.1-2.3%, down from an earlier forecast of around 2.9 percent. The bottom line? There were no dramatic items in the Fed statement, with one analyst describing current Fed policy as “steady as she goes”. The market perception that US interest rates will remain low was good news for gold, which jumped about 2.8% on Thursday.

In Iraq, the situation remains volatile, as militants linked to al-Qaeda continue to push back government troops and have overrun the north of the country. The insurgents are only about 60 kilometers from the capital of Baghdad, and the situation has quickly escalated into a major crisis for both the Iraqi and US governments. Gold prices have jumped this week, as the metal is considered a hedge during periods of geopolitical instability. We could see gold prices climb even higher if the situation continues to deteriorate.


XAU/USD for Friday, June 20, 2014

XAU/USD June 20 at 9:25 GMT

XAU/USD 1308.20 H: 1316.96 L: 1306.50


XAU/USD Technical

S3 S2 S1 R1 R2 R3
1260 1275 1300 1315 1331 1354


  • Gold prices have edged lower on Friday, as the pair remains above the 1300 level.
  • 1300 has reverted to a support role as XAU/USD continues to move higher. This is followed by a support level at 1275.
  • 1315 is the next resistance line, and saw action earlier in the day. This is followed by resistance of 1331, which has remained intact since late March.
  • Current range: 1300 to 1315.

Further levels in both directions:

  • Below: 1300, 1275, 1260 and 1250
  • Above: 1315, 1331, 1354 and 1375


OANDA’s Open Positions Ratio

XAU/USD ratio has posted strong gains in short positions. This is due to the strong gain in gold prices, which has led to numerous long positions being covered, resulting in a larger percentage of open short positions. The ratio is made up of a majority of long positions, reflecting trader bias towards gold prices continuing to move higher.

Gold has posted slight losses on Friday. XAU/USD is almost unchanged in the European session.


XAU/USD Fundamentals

  • There are no US releases on Friday.


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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.