XAU/USD – Gold Posts Slight Gains, Inflation Numbers Mixed

Gold has shown slight gains in the Tuesday session. In North American trade, the metal is trading at a spot price of $1261.02 per ounce. On the release front, US CPI edged upwards to 0.3%, matching the forecast. Core CPI dipped to 0.1%, shy of the forecast of 0.2%. On Wednesday, the US will release Crude Oil Inventories and Building Permits.

On Tuesday, US consumer inflation numbers were a mixed bag. CPI edged up to 0.3%, up from 0.2% a month earlier. This was the strongest gain since April. Core CPI went the opposite direction, slipping to 0.1%, down from 0.3% a month earlier. These numbers could have an important bearing on the Fed’s interest rate decision in December. Currently, a December rate hike is currently priced in at 64 percent. Meanwhile, US consumer spending impressed in September. Retail sales gained 0.5%, while core retail sales jumped 0.6%, as both key indicators rebounded from declines in August. PPI was steady at 0.3%, but the UoM Consumer Sentiment Index disappointed, dropping to 87.9 points and missing expectations. This marked the weakest reading since September 2015.

Higher crude oil prices are bullish for the raw commodity sector in general, including precious metals. US crude posted strong gains last week after Russian president Vladimir Putin stated that Russia would join the OPEC agreement to cap production levels. OPEC members surprised the markets in late September when they reached a tentative agreement to put a ceiling on production levels in order to stabilize oil prices. OPEC has called on other exporters to join the agreement, and having the backing of Russia could be an important step towards reaching a final agreement, slated for late November. At the same time, oil producers have not been able to bridge their differences in the past, notably Saudi Arabia and Iran, so there is certainly room for doubt that an agreement will actually be signed.

XAU/USD Fundamentals

Tuesday (October 18)

  • 8:30 CPI. Estimate 0.3%. Actual 0.2%. Actual 0.3%
  • 8:30 Core CPI. Estimate 0.2%. Actual 0.1%
  • 10:00 NAHB Housing Market Index. Estimate 64 points. Actual 63 points
  • 16:00 TIC Long-Term Purchases.

Wednesday (October 19)

  • 8:30 Building Permits. Estimate 1.17M
  • 10:30 Crude Oil Inventories. Estimate 2.4 million

*All release times are EDT

*Key events are in bold

XAU/USD for Tuesday, October 18, 2016

XAU/USD October 18 at 11:45 EDT

Open: 1255.80 High: 1264.08 Low: 1255.61 Close: 1261.02

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1199 1223 1245 1279 1307 1331
  • XAU/USD posted slight gains in the Asian session has been choppy in the European and North American trade
  • 1245 is providing support
  • There is resistance at 1279
  • Current range: 1245 to 1279

Further levels in both directions:

  • Below: 1245, 1223 and 1199
  • Above: 1279, 1307 and 1331

OANDA’s Open Positions Ratio

XAU/USD ratio is showing long positions with a substantial majority (78%). This is 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.