XAU/USD – Gold Edges Higher After Late Week Losses

Gold has posted small gains on Monday, following losses in the past two sessions. The metal is trading at a spot price of $1313.91 per ounce in the North American session. On the release front, it’s a slow start to the week, with just one event on the schedule. NAHB Housing Market Index improved to 65 points, beating expectations. On Tuesday, the US will release Building Permits, a key event.

Gold prices dropped 1.4 percent last week, as the markets continue to speculate about a Federal Reserve rate hike. Will the downward trend continue? Gold prices are sensitive to interest rate moves, so we could see some movement from the base metal in the days ahead of the Federal Reserve policy meeting on September 21, although the Fed is unlikely to raise rates before December.

US releases ended the week on a positive note, as August consumer inflation was a bit better than expected. CPI posted a gain of 0.2%, edging above the forecast of 0.1%. It was a similar story with Core CPI, which rose 0.3%, compared to the forecast of 0.2%. CPI was up from 0.0% in July, with the rise being attributed to higher shelter and health care costs. If inflation indicators continue to rise, there is a greater chance of a rate hike in December, and increased speculation about a Fed hike could push gold prices downwards.

Ever since an upbeat speech from Janet Yellen in August, the markets have been speculating about the timing of the next Fed rate hike. However, recent economic numbers have been mixed, so the Fed is expected to remain on the sidelines on Wednesday, when it sets the benchmark rate. However, the Fed statement will be of intense interest, and the markets will be looking for clues regarding a December move. If Janet Yellen delivers a dovish message, the market’s mood could sour and gold could reverse some of its recent losses. Recent comments from FOMC members, which have been almost contradictory at times, have left the markets confused and reinforced the perception that the Fed remains divided regarding its near-future monetary policy. Will the rate picture clear up or remain fuzzy after the rate statement?

XAU/USD Fundamentals

Monday (September 19)

  • 14:00 US NAHB Housing Market Index. Estimate 60 points. Actual 65 points

Tuesday (September 20)

  • 12:30 US Building Permits. Estimate 1.17M

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Monday, September 19, 2016

XAU/USD September 19 at 13:35 EDT

Open: 1310.98 High: 1318.44 Low: 1309.46 Close: 1313.91

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1245 1279 1307 1331 1361 1388
  • XAU/USD has shown limited movement in the Monday session
  • 1307 continues to provide weak 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 are showing long positions with a strong majority (79%), 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.

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.