Gold Unchanged, Fed Minutes Loom

Gold is almost unchanged in the Tuesday session. In North American trade, gold is trading at $1255.87 per ounce. On the release front,  the trade deficit narrowed to $43.6 billion, better than the forecast of $46.0 billion. On Wednesday, the spotlight will be on the Federal Reserve, which will publish the minutes of its March policy meeting. As well, the US will release ADP Employment Change and ISM Non-Manufacturing PMI.

The US economy hasn’t missed a beat in 2017, and the markets are expecting strong data for the first quarter. The CB consumer confidence report soared to 125.6 in March, and strong consumer confidence levels should translate into increased consumer spending, a key component of economic growth. GDP for the fourth quarter was revised to 2.1%, up from 1.9% in the previous GDP report. With the economy headed in the right direction, the discussions around the monetary policy tables are not whether the Fed will raise rates, but will it press the rate trigger two or three more times in 2017. The markets will be paying close attention to the minutes of the March meeting, when the Fed raised rates by a quarter-point, to a range of 0.75-1.00%. Any hints about the timing of the next hike, as well as the tone of the minutes are factors which could move the currency markets on Wednesday. The markets considered the rate statement overly cautious, and this sentiment sent the US dollar broadly lower. If the reaction to the minutes is one of disappointment, gold prices could move higher.

XAU/USD Fundamentals

Tuesday (April 4)

• 8:30 US Trade Balance. Estimate -46.0B. Actual -43.6B
• 10:00 US Factory Orders. Estimate 1.0%
• 10:00 US IBD/TIPP Economic Optimism. Estimate 53.2
• 16:30 US FOMC Member Daniel Tarullo Speech

Upcoming Key Events

Wednesday (April 5)

• 8:15 US ADP Nonfarm Employment Change. Estimate 191K
• 10:00 US ISM Non-Manufacturing PMI. Estimate 57.1
• 14:00 US FOMC Meeting Minutes

*All release times are GMT

*Key events are in bold

XAU/USD for Tuesday, April 4, 2017

XAU/USD April 4 at 9:35 EST

Open: 1255.67 High: 1261.29 Low: 1245.34 Close: 1255.87

XAU/USD Technical

• XAU/USD was flat in the Asian session. The pair moved higher in European trade but has given up these gains in North American trade
• 1232 is providing support
• 1260 was tested earlier in resistance and remains under pressure
• Current range: 1232 to 1260

Further levels in both directions:

• Below: 1232, 1199, 1174 and 1146
• Above: 1260, 1285 and 1307

OANDA’s Open Positions Ratio

XAU/USD ratio is showing gains in short positions. Currently, long positions have a majority (54%), indicative of trader bias towards XAU/USD breaking out and moving higher.

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