Gold Steady as Fed Guessing Game Continues

Gold is showing limited movement on Thursday, as the metal trades at a spot price of $1073.88 in the European session. Taking a look at economic news, today’s key events are Unemployment Claims and the Philly Fed Manufacturing Index. On Wednesday, the Federal Reserve released the minutes of its most recent policy meeting, as the markets prepare for a possible rate hike in December.

All eyes were on the Fed minutes of the October 28 policy meeting, which were released on Wednesday. However, there were no surprises from the Fed, and the markets didn’t show much movement after the release. At the meeting, a majority of Fed members said they were in favor of a rate hike in December. The minutes also noted that employment numbers had weakened in recent months, but analysts pointed out that this was prior to the stellar Nonfarm Payrolls report in October. On the inflation front, the minutes stated that Fed policymakers were confident that inflation would remain at stable levels.

Despite the Fed minutes sounding non-committal regarding a December rate hike, most analysts concur that the long-awaited move will indeed occur next month. Market expectations have risen to 66% that the Fed will make a move next month. Chris Rupkey, chief financial economist at Bank of Tokyo Mitsubishi, Japan’s largest bank, said he would be “astounded” if the Fed did not raise rates at their next meeting on December 16, especially in light of the strong Nonfarm Payrolls report in October. One major weak spot in the economy is that of weak inflation levels, and the Fed has repeatedly stated that inflation is a prime factor in its decision-making process. Last week’s PPI was awful, posting a second straight decline. On Tuesday, CPI and Core CPI posted small gains of 0.2%, matching the forecast. Are these lukewarm readings enough to convince a majority of Fed members to vote in favor of a hike? Time will tell. Another important factor which must be remembered is that the markets now seem prepared for a small hike of 0.25% or 0.50%, and there is a growing view that a modest move would not cause unwanted turbulence on the global markets.

The US economy continues to show improvement in most areas, but the manufacturing sector continues to lag behind. Earlier this week, the Empire State Manufacturing Index posted its fourth straight decline, underlining worsening conditions in the manufacturing sector. In November, the indicator came in at -10.7 points, weaker than the forecast of -5.3 points. On Thursday, we’ll get another look at manufacturing data, with the release of the Philly Fed Manufacturing Index. This indicator has also struggled, posting two straight declines. The markets are expecting some improvement in the November report, with an estimate of 0.1 points.

XAU/USD Fundamentals

Thursday (Nov. 19)

  • 13:30 US Unemployment Claims. Estimate 272K
  • 15:00 US Philly Fed Manufacturing Index. Estimate 0.1 points
  • 15:00 US CB Leading Index. Estimate 0.5%
  • 15:30 US Natural Gas Storage. Estimate 23B
  • 17:30 FOMC Member Dennis Lockhart Speaks
  • 21:45 FOMC Member Stanley Fischer Speaks

*Key releases are highlighted in bold

*All release times are GMT


XAU/USD for Thursday, November 19, 2015

Forex Rate Graph 21/1/13

XAU/USD November 19 at 11:35 GMT

XAU/USD 1073 H: 1079 L: 1071


XAU/USD Technical

S3 S2 S1 R1 R2 R3
980 1024 1043 1080 1098 1134
  • XAU/USD posted slight gains in the Asian session but has reversed directions in the European session.
  • 1080 remains a weak resistance line. Will it break during the day?
  • 1043 is a strong support level.
  • Current range: 1043 to 1080

Further levels in both directions:

  • Below: 1043, 1024 and 980
  • Above: 1080, 1098, 1134 and 1151


OANDA’s Open Positions Ratio

XAU/USD ratio is showing little movement, reflective of the lack of movement from the pair. Long positions continue to make up a strong majority (74%), indicative of trader bias towards gold prices moving to higher levels.

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.