Gold Struggles to Stay Above 1200

Gold prices are stable on Wednesday, following sharp losses a day earlier. In the European session, the metal is trading at a spot price of $1205.27. On the release front, it’s a busy day, with the release of Building Permits and PPI. The highlight of the day is the Federal Reserve minutes.

The Greece bailout crisis continues to swirl this week, as Eurozone finance ministers (Eurogroup) abruptly halted talks on Monday aimed at reaching an agreement between Greece and its creditors. The bailout agreement expires at the end of February, and Eurogroup head Jeroen Dijsselbloem said that Greece must accept the next installment of funds under current bailout conditions. For its part, Greece has demanded easier austerity conditions while continuing to have access to bailout funds. Another meeting of the Eurogroup has been planned for Friday, and the markets will be nervously following developments on the bailout front during the week. The stakes are high, as lack of an agreement could lead to Greece leaving the Eurozone and abandoning the euro.

The markets are keeping a close eye on the Fed minutes, which will be released later on Wednesday. With the US economy showing strong growth and positive employment numbers, there are widespread expectations for a rate hike as early as the summer. Any hints regarding a hike could provide a strong boost for the US dollar against its major rivals.

XAU/USD for Wednesday, February 18, 2015

XAU/USD February 18 at 11:50 GMT

XAU/USD 1205.27 H: 1211.17 L: 1202.73

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1154 1175 1200 1215 1240 1255

 

  • XAU/USD has showed little movement in the Asian and European sessions.
  • 1215 is a weak resistance line. 1240 is next.
  • On the downside, 1200 is under pressure. Will the pair break below this line?
  • Current range: 1200 to 1215

Further levels in both directions:

  • Below: 1200, 1175, 1154 and 1131
  • Above: 1215, 1240, 1255, 1275, 1300

OANDA’s Open Positions Ratio

g_20150218_ratio

(Shows the ratio of long vs. short positions held for Gold among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)

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

 

XAU/USD Fundamentals

  • 13:30 US Building Permits. Estimate 1.08M.
  • 13:30 US PPI. Estimate -0.4%.
  • 13:30 US Core PPI. Estimate 0.1%.
  • 13:30 US Housing Starts. Estimate 1.07M.
  • 14:15 US Capacity Utilization Rate. Estimate 79.9%.
  • 14:15 US Industrial Production. Estimate 0.5%.
  • 19:00 US FOMC Meeting Minutes.
  • 21:00 US TIC Long-Term Purchases. US 41.3B.
  • 22:00 US FOMC Member Jerome Powell Speaks.

*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.