Gold prices continues to have a quiet week, as the base metal trades at $1086.10 an ounce in Tuesday’s North American session. On the release front, it’s a quiet day in the US, with two minor indicators. US NAHB Housing Market Index met expectations. On Wednesday, the US releases two key events, CPI and Building Permits.
Gold has gained 2.2 percent in the month of January, as jittery investors have shunned risky assets in favor of safe-haven assets like gold. Events in China precipitated the kiwi’s woes, as the Chinese stock market meltdown and devaluation of the Chinese yuan spooked the markets. The bad news continued this week, as Chinese GDP for the fourth quarter showed another drop, dipping to 6.8%, shy of the forecast of 6.9%. Annual Chinese GDP for 2015 came in at 6.9%, the weakest annual gain in 25 years. Tensions throughout the Middle East have also contributed to gold moving higher in early 2016, as investors demonstrate little appetite for risk.
The Federal Reserve finally pressed the rate trigger in December, and the markets are looking for hints of the next interest rate increase. A rate hike at next week’s Fed policy meeting is not considered likely, coming so soon after the December move. A hike by the Fed in March is more probable, although this is contingent on a strong US economy. Although the economy is in good shape, one major area of concern is the inflation picture. Inflation levels have not kept up with other economic indicators and remain at low levels. Another concern is a lack of wage growth, despite a robust labor market. The Fed will be keeping a close eye on Wednesday’s CPI reports, and it’s a safe bet that policymakers will want to see stronger inflation numbers before signing on for another rate hike.
Tuesday (Jan. 19)
- 10:00 US NAHB Housing Market Index. Estimate 61 points. Actual 60 points
- 16:00 US TIC Long-Term Purchases
Wednesday (Jan. 20)
- 8:30 US Building Permits. Estimate 1.20M
- 8:30 US CPI. Estimate 0.0%
- 8:30 US Core CPI. Estimate 0.2%
*All release times are EST
*Key events are in bold
XAU/USD for Tuesday, January 19, 2016
XAU/USD January 19 at 11:50 GMT
Open: 1088.56 Low: 1082.51 High: 1094.60 Close: 1086.10
- XAU/USD posted slight gains in the Asian session but retracted in European trade. The pair is flat in the North American session.
- There is resistance at 1098
- 1080 is providing support
- Current range: 1080 to 1098
Further levels in both directions:
- Below: 1080, 1043 and 1024
- Above: 1098, 1134, 1151 and 1175
OANDA’s Open Positions Ratio
The XAU/USD ratio is unchanged, indicative of the lack of movement from the pair. Long positions retain a solid majority (69%), indicative of strong trader bias towards gold prices continuing to move higher.