Gold Stable Ahead of US GDP Release

Gold has shown limited movement on Friday, as the spot price stands at $1205.02 in the European session. On the release front, the US will issue its second estimate of GDP for Q4, with a forecast of 2.1%. This is lower than the initial estimate of 2.6% in January. We’ll also get a look at Revised UoM Consumer Sentiment and Pending Home Sales.

Thursday’s US inflation and job numbers were not impressive. US inflation indicators continue to struggle. CPI posted a third straight decline, coming in at -0.7%. This was very close to the forecast of -0.6%. Core CPI improved to 0.2%, edging above the estimate of 0.1%. On the employment front, there was disappointing news, as Unemployment Claims jumped to a 6-week high, coming in at 313 thousand. This was much higher than the estimate of 288 thousand.

Greece and its international creditors have agreed to extend the bailout agreement after Greece’s list of economic reforms was accepted by the country’s creditors on Tuesday. Under this agreement, the Greek government has promised to continue with privatization plans and to meet budget targets. Still, the extension is a stop-gap measure and with sharp differences remaining between Greece and its creditors, the bailout crisis is far from over. If Greece and Germany again lock horns and doubts are raised about whether Greece will remain in the Eurozone, we could see the euro lose ground.

Janet Yellen testified before Congressional committees on Tuesday and Wednesday, saying that the Fed was “unlikely” to raise interest rates in the next few months, given current economic conditions. Her remarks seemed aimed at quelling rising speculation about a rate hike sometime in mid-2015, which has helped boost the US dollar’s performance against its major rivals. Yellen noted that the continuing economic growth should lead to unemployment continuing to fall, but wages and inflation need to move higher before the Fed raises interest rates.

XAU/USD for Friday, February 27, 2015

XAU/USD February 27 at 10:25 GMT

XAU/USD 1205.02 H: 1212.36 L: 1204.73

 

XAU/USD Technical

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

 

  • XAU/USD has shown little movement in the Asian and European sessions.
  • On the downside, 1200 is under strong pressure and could break during the day. 1175 is next.
  • 1215 is a weak resistance line.
  • Current range: 1200 to 1215

Further levels in both directions:

  • Below: 1200, 1175, 1154 and 1131
  • Above: 1215, 1240, 1255, 1275 and 1307.11

 

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged on Friday. This is consistent with the limited movement we are seeing from the pair. The ratio has a majority of long positions, indicating trader bias towards gold moving to higher ground.

XAU/USD Fundamentals

  • 13:30 US Preliminary GDP. Estimate 2.1%.
  • 13:30 US Preliminary GDP Price Index. Estimate 0.0%.
  • 14:45 US Chicago PMI. Estimate 58.4 points.
  • 15:00 US Pending Home Sales. Estimate 2.5%.
  • 15:00 US Revised UoM Consumer Sentiment. Estimate 94.2 points.
  • 15:00 US Revised UoM Inflation Expectations.
  • 15:15 US FOMC Member William Dudley Speaks.
  • 18:30 US FOMC Member Stanley Fischer 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.