Gold Struggles to Stay Above $1200

Gold is steady on Tuesday, after sustaining sharp losses a day earlier. In the European session, the spot price stands at $1202.00. In the US, today’s highlight is Building Permits. The markets are expecting a slight loss in the upcoming reading, with the estimate standing at 1.06 million.

Gold prices started the week with losses, as the metal shed about 1.8% of its value on Monday, closing at $1198. Gold continues to trade close to the key $1200 level on Tuesday. Why the sharp drop on Monday? One reason is last week’s US numbers, as solid employment and retail sales numbers helped boosted the dollar. As well, the markets are expecting a bullish view of the US economy from the Federal Reserve policy statement on Wednesday.

In the US, UoM Consumer Sentiment moved higher for a fourth straight month, pointing to increased optimism among US consumers. The key indicator soared to 93.8 points, its highest level since January 2007 and well above the forecast of 89.6 points. Earlier in the week, there was good news from retail sales and jobless claims. 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.

XAU/USD for Tuesday, December 16, 2014

XAU/USD December 16 at 9:40 GMT

XAU/USD 1202.95 H: 1202.95 L: 1193.45

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1156 1175 1200 1215 1240 1255

 

  • XAU/USD has showed small gains in the Asian session. The pair has moved slightly higher in the European session, breaking above support at 1200.
  • On the upside, 1215 is a weak resistance line. 1240 is stronger.
  • The round number of 1200 is under strong pressure and could see further activity during the day.
  • Current range: 1200 to 1215

Further levels in both directions:

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

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in long positions on Tuesday, continuing the trend seen a day earlier. This is consistent with the pair’s movement, as gold has posted small gains. The ratio has a majority of long positions, indicative of trader bias towards gold moving to higher ground.

XAU/USD Fundamentals

  • 13:30 US Building Permits. Estimate 1.06M.
  • 14:15 US Housing Starts. Estimate 1.04M.
  • 14:45 US Flash Manufacturing PMI. Estimate 56.1 points.

*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.