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Gold Down Sharply as Fed Members Hint Hike

Gold has posted sharp losses on Wednesday, with the spot price trading at $1224.03 an ounce in the North American session. In economic news, Federal Reserve policymakers continue to make hawkish statements about the possibility of a Fed hike in the near future. US New Homes Sales climbed to 512 thousand, matching the forecast.

Gold tends to rise in times of crisis or uncertainty, and this was the case on Tuesday, as the metal jumped about 1 percent following news of a series of explosions in Brussels, which killed 33 people and wounded at least 200. The attacks took place at the international airport and a subway station, causing European stock markets to fall. Gold prices have since retracted, wiping out most of the earlier gains. The situation in Belgium remains fluid, and further developments could lead to gold showing additional volatility.

Gold prices have slipped 1.9 percent on Wednesday, as Federal Reserve policymakers have surprised the markets with hawkish statements concerning another rate hike. Last week’s policy statement appeared to pour cold water on any imminent rate hikes, but “not so fast”, according to two Federal Reserve officials. On Monday, John Williams, president of the San Francisco Fed, said that the Fed could raise rates in April and June, if economic conditions improve. Although the dot plot (an FOMC projection of rate hikes) was lowered at the March meeting, he insisted that the Fed had not changed its path of rate hikes. His comments were echoed by Atlanta Fed Dennis Lockhart, who also said that an April rate move was a clear possibility. Lockhart noted that the US economy was holding up well, despite weak global conditions. Lockart said that the economy was close to full employment and the Fed’s target of 2 percent inflation was attainable. On Wednesday, St. Louis Federal President James Bullard said that with the US unemployment rate at very low levels, the Fed could be forced to raise rates sooner rather than later.

XAU/USD Fundamentals

Wednesday (March 23)

Upcoming Key Events

Thursday (March 24)

*Key releases are highlighted in bold

*All release times are DST

XAU/USD for Wednesday, March 23, 2016

XAU/USD March 23 at 13:45 DST

Open: 1248.40 Low: 1215.36 High: 1249.40 Close: 1224.03

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1169 1191 1205 1232 1255 1279

Further levels in both directions:

OANDA’s Open Positions Ratio

XAU/USD ratio is showing some movement towards long positions. This is consistent with the losses sustained by XAU/USD which have resulted in the covering of short positions. Long positions have a strong majority (61%), indicative of trader bias towards gold reversing directions and moving upwards.

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 [4]

Market Analyst at OANDA [5]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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