Gold is showing some volatility on Monday, as the metal trades at a spot price of $1087.47 in the European session. In the US, the sole event on the schedule is the Empire State Manufacturing Index, an important manufacturing indicator. The markets are expecting a reading of -5.3 points.
The Fed policy statement was unexpectedly hawkish in October, and this has understandably fueled market speculation about a rate hike in December. However, the Fed has been split over a rate hike for quite some time, and many members will be hesitant to vote in favor of raising rates unless they are confident that the US economy can withstand an interest rate hike. Employment numbers out of the US have certainly improved, with recent indicators such as the unemployment rate pointing to close to full employment in the US economy. At the same time, other indicators have not fared as well, particularly manufacturing data and inflation levels. While a rate hike in December is back on the front burner, it is by no means a done deal, making for plenty of speculation on the part of market players in the next several weeks regarding a possible move by the Fed.
US numbers on Friday were a mix. Retail Sales and PPI both fell short of expectations. Retail Sales came in at 0.1%, while Core Retail Sales was only marginally better, with a small gain of 0.2%. PPI came in at -0.4%, as the manufacturing inflation indicator posted a second straight decline. There was better news on the consumer front, as U0M Consumer Sentiment improved to 93.1 points, beating the estimate of 91.3 points. On Tuesday, we’ll get a look at US CPI and Core CPI, the primary gauges of consumer inflation. These indicators could play a crucial factor of whether the Fed makes a move and raises rates next month. Strong CPI readings could win over Fed policymakers who are concerned about whether the economy is strong enough to withstand a rate hike. So traders should be prepared for volatility after the CPI releases.
Monday (Nov. 16)
- 13:30 US Empire State Manufacturing Index. Estimate -5.3 points
Upcoming Key Events
Tuesday (Nov. 17)
- 13:30 US CPI. Estimate 0.2%
- 13:30 US Core CPI. Estimate 0.2%
*Key releases are highlighted in bold
*All release times are GMT
XAU/USD for Monday, November 16, 2015
XAU/USD November 16 at 13:40 GMT
XAU/USD 1087 H: 1098 L: 1088
- XAU/USD moved higher in the Asian session but has given up these gains in the European session.
- 1080 is a weak support level.
- 1098 is an immediate resistance line.
- Current range: 1080 to 1098
Further levels in both directions:
- Below: 1080, 1043 and 1024
- Above: 1098, 1134, 1151 and 1162
OANDA’s Open Positions Ratio
XAU/USD ratio is showing movement towards long positions, reflective of a lack of movement from gold. Long positions have a strong majority (79%), indicative of trader bias towards gold prices moving upwards.