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XAU/USD – Gold Under Pressure as Fed Rate Hike Imminent

Gold prices has edged up in the Monday session. In the North American session, the metal is trading at $1211.84. On the release front, it’s a quiet start to the week, with no US events on the schedule. With the odds of a Fed rate hike in December approaching 100 percent, gold remains under pressure, as the metal tends to move inversely to rate movements.

Gold Recovering After USD Cools Down [1]

US key indicators were generally strong on Thursday, pointing to a strong economy. Unemployment Claims sparkled at 235 thousand, much lower than the estimate of 257 thousand. This marked the lowest weekly claims total since 1973. CPI matched expectations at 0.4%, but Core CPI came in at 0.1% shy of the estimate of 0.2%.  The Philly Fed Manufacturing Index dropped to 7.6 points, short of the forecast. On the housing front, Housing Starts remained unchanged at 1.23 million, above expectations.

Gold prices slipped on Thursday, following Fed Chair Yellen’s appearance before a congressional committee. Yellen did not explicitly acknowledge that the Fed would raise rates at the December 13-14 policy meeting, but she did say that the rate hike would be “relatively soon”. Yellen make no mention of Donald Trump’s potential policies, which could include greater fiscal spending, as she reiterated that future rate hikes should be “gradual”. Commenting on Yellen’s testimony, Jonathan Wright, a former Fed economist, summed up market sentiment –  “a rate hike in December is a done deal, barring a significant surprise in the next jobs numbers or in financial markets”.

XAU/USD Fundamentals

Monday (November 21)

*All release times are EST

*Key events are in bold

XAU/USD for Monday, November 21, 2016

XAU/USD November 21 at 12:10 EST

Open: 1206.23 High: 1217.77 Low: 1206.21 Close: 1211.84

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1146 1174 1205 1223 1245 1279

Further levels in both directions:

OANDA’s Open Positions Ratio

In the Monday session, XAU/USD ratio is showing long positions with a substantial majority (79%). This is indicative of trader bias towards XAU/USD continuing to move to higher levels.

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 [5]

Market Analyst at OANDA [6]
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.
Kenny Fisher

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