XAU/USD – Gold Slips as Consumer Confidence Sparkles

Gold has posted considerable losses on Tuesday. In the North American session, the metal is trading at a spot price of $1327.38 per ounce. On the release front, CB Consumer Confidence shot up to 104.1 points, easily beating the forecast of 98.6 points. There news was not as positive from the manufacturing sector, as the Richmond Manufacturing Index came in at -8 points, much weaker than the forecast of -2 points.

US consumer confidence numbers are closely monitored by analysts. Stronger consumer confidence often translates into increased spending by consumers, which is vital for economic growth. The CB Consumer Confidence survey continues to point higher, climbing to 104.4 points in September. This excellent release improved upon the August report, which came in at 101.1, above the forecast of 97.2 points. Gold prices have fallen in response to the strong consumer data. The Fed is sure to take note of surging consumer confidence, which could improve the likelihood of a December rate hike.

Federal Reserve chair Janet Yellen will testify before a Congressional committee on Thursday, and her remarks could shed more light on the Fed’s plans regarding a rate hike. Last week, the Fed held interest rates at 0.25%. The Fed policy statement was generally upbeat and broadly hinted at a December rate hike. However, the markets can be forgiven for remaining somewhat skeptical, as the Fed has previously talked about a strong US economy and failed to follow up with a rate hike. Currently, a rate hike is priced in at 51 percent, but plenty can happen until the December policy meeting (the Fed is unlikely to make a move in November, just ahead of the US presidential election). The Fed has consistently stated that the next rate hike will be data-dependent, which means that stronger economic numbers, especially on the inflation front, will increase the likelihood of a December hike.

XAU/USD Fundamentals

Tuesday (September 27)

  • 13:00 US S&P/CS Composite-20 HPI. Estimate 5.0%.Actual 5.0%
  • 13:45 US Flash Services PMI. Estimate 51.1. Actual 51.9
  • 14:00 US CB Consumer Confidence. Estimate 98.6. Actual 104.1 
  • 14:00 US Richmond Manufacturing Index. Estimate minus -2. Actual minus -8
  • 15:15 US FOMC Member Stanley Fischer Speaks

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Tuesday, September 27, 2016

XAU/USD September 27 at 10:50 EDT

Open: 1338.44 High: 1339.55 Low: 1326.00 Close: 1327.38

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1245 1279 1307 1331 1361 1388
  • XAU/USD showed limited movement in the Asian and European sessions. The pair has posted strong losses in North American trade
  • 1307 is providing support
  • 1331 is a weak resistance line
  • Current range: 1307 to 1331

Further levels in both directions:

  • Below: 307, 1279 and 1245
  • Above: 1331, 1361, 1388 and 1416

OANDA’s Open Positions Ratio

XAU/USD ratio is almost unchanged on Tuesday. Currently, long positions with a substantial majority (63%). This is indicative of trader bias towards XAU/USD 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

Market Analyst at OANDA
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.