XAU/USD – Gold Ticks Higher, Markets Eye Retail Sales

Gold has posted small gains on Wednesday, as the metal trades at a spot price of $1323.60 per ounce in the North American session. On the release front, it’s another quiet day, with no major events on the schedule. US Import Prices dropped 0.1%, its first decline in six months. There are a host of key events on Thursday, highlighted by retail sales and unemployment claims.

Gold prices have dropped this week, as the markets continue to speculate about a Federal Reserve rate hike, with the Fed policy meeting just one week away. Although a September hike is not considered likely, the Fed has been dropping hints that it could make a move sooner rather than later and that the next move will be data-dependent. This means that upcoming indicators, such as retail sales, will be under the market microscope, and any unexpected readings could have a significant effect on gold prices.

With a September rate hike unlikely but still on the table, the markets have been paying close attention to comments from FOMC members in connection with the Fed’s monetary policy. On Monday, FOMC member Lael Brainard sounded cautious, saying it would be prudent to maintain a loose monetary policy. Brainard noted global uncertainties and weak inflation as reasons for the Fed not to rush into raising rates. This dovish message was in marked contrast to remarks from FOMC member Eric Rosengren last week, who came out in support of a rate hike, without providing a timeline. Rosengren said that “tightening is likely to be appropriate”, and went as far as to say that the US economy could overheat if the Fed didn’t act soon. These mixed messages certainly haven’t clarified matters, leaving markets players in the dark as to the Fed’s monetary plans with a week to go before a crucial Fed policy meeting. The markets have had few fundamental cues to work with so far this week, but that will change on Thursday, as the US releases retail sales, PPI, the Philly Fed Manufacturing Index and unemployment claims. If these numbers are stronger than expected, speculation about a September hike will rise and gold prices could fall.

XAU/USD Fundamentals

Wednesday (September 14)

• 8:30 US Import Prices. Estimate -0.2%. Actual +0.1%
• 10:30 US Crude Oil Inventories. Estimate +2.8M. Actual -0.6M

Upcoming Key Events

Thursday (September 15)

• 8:30 US Core Retail Sales. Estimate 0.3%
• 8:30 US PPI. Estimate 0.1%
• 8:30 US Philly Fed Manufacturing Index. Estimate 1.1
• 8:30 US Retail Sales. Estimate -0.1%
• 8:30 US Unemployment Claims. Estimate 262K

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Wednesday, September 14, 2016

XAU/USD September 14 at 12:10 EDT

Open: 1320.94 High: 1326.04 Low: 1316.01 Close: 1324.01

XAU/USD Technical

• XAU/USD has shown limited movement in the Wednesday session
• 1307 is providing support
• There is resistance at 1331
• Current range: 1307 to 1331

Further levels in both directions:

• Below: 1307, 1279 and 1245
• Above: 1331, 1361, 1388 and 1416

OANDA’s Open Positions Ratio

XAU/USD ratio is showing little movement on Wednesday, consistent with the lack of movement from XAU/USD. Currently, long positions have a strong majority (70%), indicative of trader bias towards XAU/USD continuing to move 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.