Gold Steady as Markets Eye PPI and Consumer Confidence Data

Gold is showing limited movement on Friday, continuing the trend which has marked XAU/USD for most of the week. In the European session, the spot price stands at $1222.41. In the US, there are two major events – Producer Price Index and the UoM Consumer Sentiment. The inflation index is expected to show a small decline, but the markets are anticipating that the consumer confidence report will continue its upward trend.

US retail sales reports, the primary gauge of consumer spending, looked sharp in November. Core Retail Sales came in at 0.5%, ahead of the estimate of 0.1%. Not to be undone, Retail Sales posted a gain of 0.7%, beating the estimate of 0.4%. This was the indicator’s strongest showing in 12 months. There was more good news on the job front, as Unemployment Claims dipped to 294 thousand, below the forecast of 299 thousand.

The euro showed little response to the ECB’s second TLTRO (Targeted Long Term Refinancing Option) on Thursday. This lending program aims to bolster the economy by increasing bank lending to the real economy. The auction saw European banks take loans of about EUR 130 billion. Although this was higher than the September auction, which had a take-up of EUR 82 billion, the total of around 212 billion was only half of the ECB target of 400 billion. The disappointing figure means that the ECB remains under strong pressure to introduce QE early in 2015, which would likely push the euro to further lows. Meanwhile, the Eurozone continues to struggle with low inflation levels, with a senior ECB official warning of deflation dangers. Speaking in Washington on Tuesday, ECB board member Peter Praet said that falling oil prices could push Eurozone inflation into negative territory.

XAU/USD for Friday, December 12, 2014

XAU/USD December 12 at 8:55 GMT

XAU/USD 1222.41 H: 1226.79 L: 1217.44

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1175 1200 1215 1240 1255 1275

 

  • XAU/USD has shown little movement in the Asian and European sessions.
  • On the downside, 1215 remains under pressure. The round number of 1200 is next.
  • 1240 is an immediate resistance line.
  • Current range: 1215 to 1240

Further levels in both directions:

  • Below: 1215, 1200, 1175, 1156 and 1130
  • Above: 1240, 1255, 1275 and 1290

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in long positions on Friday. This is not consistent with the pair’s movement, as gold has posted small losses. The ratio has a slight majority of long positions, indicative of a slight trader bias towards gold moving to higher ground.

XAU/USD Fundamentals

  • 13:30 US PPI. Estimate -0.1%.
  • 13:30 US Core PPI. Estimate 0.1%.
  • 14:55 US Preliminary UoM Consumer Sentiment. Estimate 89.6 points.
  • 14:55 US Preliminary UoM Inflation Expectations.

*Key releases are highlighted in bold

*All release times are GMT

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.