XAU/USD – Gold Rises on Weak Consumer Confidence Report

Gold has posted gains of close to one percent in the Tuesday session. In North American trade, the metal is trading at a spot price of $1273.13 per ounce. On the release front, CB Consumer Confidence Spending dropped to 98.6 points, well short of the forecast of 101.5 points. On Wednesday, the US will release New Home Sales.

CB Consumer Confidence softened in October. The indicator fell to 98.6 points, down from 104.1 points in the September report. This marked a 3-month low for the indicator. The disappointing reading could translate into lower consumer spending, which would likely put a crimp in the high-flying US dollar. Gold took advantage of the weak release and has touched a high of $1274 on Tuesday, close to 3-week highs.

US jobless claims have sparkled in recent weeks, so there was some surprise as the key indicator climbed to 260 thousand on Thursday, higher than the forecast of 251 thousand. This marked the first reading since August that the key indicator has not beat estimates. Still, the dollar didn’t lose any ground, as the 4-week daily average of jobless claims remains excellent. There was good news from the manufacturing front, as the Philly Fed Manufacturing Index posted a strong gain of 9.7 points, easily beating the forecast of 5.2 points. On the inflation front, 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 68 percent, as market sentiment remains high that the Fed will press the rate trigger before the end of the year.

XAU/USD Fundamentals

Tuesday (October 25)

• 9:00 US HPI. Estimate 0.5%. Actual 0.7%
• 9:59 US Richmond Manufacturing Index. Estimate -5 Actual -4
• 10:00 US S&P/CS Composite-20 HPI. Estimate 5.1%. Actual 5.1%
• 10:00 US CB Consumer Confidence. Estimate 101.5. Actual 98.6
• 10:00 IBF/TIPP Economic Optimism. Estimate 47.6. Actual 51.3

Upcoming Key Events

Wednesday (October 26)

• 10:00 US New Home Sales. Estimate 601K
• 10:30 US Crude Oil Inventories. Estimate +0.7 million

*All release times are EDT

*Key events are in bold

XAU/USD for Tuesday, October 25, 2016

XAU/USD October 25 at 12:10 EDT

Open: 1263.40 High: 1274.15 Low: 1262.11 Close: 1273.13

XAU/USD Technical

• XAU/USD posted slight gains in the Asian and European sessions. The pair continues to gain ground in North American trade
• 1245 is providing support
• 1279 is a weak resistance line
• 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 (72%). 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.