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XAU/USD – Gold Unchanged as Fed Minutes Looms

Gold is under pressure in the Tuesday session but remains unchanged. In North American trade, the spot price for one ounce is $1237.53. In economic news, US Flash Service and Manufacturing PMIs showed expansion and beat the estimates. On Wednesday, the Federal Reserve will publish the minutes of the January policy meeting. Traders should treat this event as a market-mover for gold, which is sensitive to interest rates moves.

The Federal Reserve will again be in the spotlight on Wednesday. The central bank finally pressed the rate trigger in December, a full year after the previous rate hike. However, the hike has not put a dent in gold prices, which have risen some 7.5 percent in 2017. Despite speculation that another hike is on the way, market uneasiness over the Trump administration continues to grow, dampening investor appetite for risk. Trump continues to have difficulty filling in key cabinet positions and the media continues to probe connections between Trump officials and Russia. Trump has fired back by bitterly attacking the media, and lost in the mayhem is a clear and coherent economic policy. Although Trump has been in office for just over a month, the perception of a muddled and disoriented White House is creating uncertainty and has helped boost gold, a traditional safe-haven asset.

With Fed Chair Janet Yellen’s giving the US economy a thumbs-up last week, the markets are keen to review the Fed policy minutes, which will be released on Wednesday. Testifying before Congress last week, Yellen noted that inflation is moving towards the Fed’s 2 percent target, the labor market remains red-hot and consumer spending is strong. Yellen strongly hinted that a rate hike was imminent, leaving the markets to speculate if the Fed prefers to make a move in March or June. If the US economy stays on track in 2017, analysts expect two or three rate hikes of a quarter-point. At the same time, the Fed wants to take into account the economic stance of the new administration, but this remains an elusive goal.

XAU/USD Fundamentals

Tuesday (February 21)

Wednesday (February 22)

XAU/USD for Tuesday, February 21, 2017

XAU/USD February 21 at 13:35 EST

Open: 1236.96 High: 1238.06 Low: 1226.07 Close: 1237.53

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1174 1199 1232 1260 1285 1307

Further levels in both directions:

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Tuesday session. Currently, long positions command a majority (63%), indicative of trader bias towards XAU/USD breaking out and moving 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 [4]

Market Analyst at OANDA [5]
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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