Gold Inches Higher as GDP Within Expectations

Gold continues to creep higher, and has pushed to a 2-week high in the Thursday session. In North American trade, the spot price for an ounce of gold is $1267.04, up 0.12% on the day. On the release front, Final GDP looked sharp in the third quarter, as the gain of 3.2% was just shy of the estimate of 3.3%. Elsewhere, the Philly Fed Manufacturing Index jumped to 26.2, above the forecast of 21.5 points. However, unemployment claims disappointed, climbing to 245 thousand. This was much higher than the estimate of 232 thousand. On Friday, there are three key events in the US – Core Durable Goods, New Home Sales and UoM Consumer Sentiment.

Tax reform was a major theme for President Trump during the election campaign. Just one year in office, Trump and fellow Republicans are celebrating passage of their landmark tax reform legislation, marking Trump’s first major legislative victory in office. On Wednesday, the House of Representatives voted to pass the tax reform bill, after it narrowly passed in the Senate, by a vote of 51-48. Trump is expected to sign the bill into law next week. The tax legislation marks the first major overhaul of the US tax code in 30 years, and reduces corporate taxes from 35% to 21%. After failing to overturn Obamacare, the Republicans finally scored a big win. The Republicans have promised significant tax relief to the middle class, but polls show that the American public remains skeptical. With congressional elections next November, tax reform promises to be a key issue, and could determine which party will control Congress in 2018.

With the US economy posting growth above 3% for another quarter, the Federal Reserve remains on track for another rate hike in January. The CME Group has pegged the odds of a January hike at 98%, and if the economy continues its current pace, the Fed could raise rates up to four times in 2018. Inflation remains a sore point, as the Fed target of 2.0% remains well out of reach. Fed Chair Janet Yellen and other FOMC members have said they expect that the strong labor market will lead to higher inflation, but the Fed has demonstrated that it is willing to press ahead with rate hikes despite low inflation.

XAU/USD Fundamentals

Thursday (December 21)

• 8:30 US Final GDP. Estimate 3.3%. Actual 3.2%
• 8:30 US Philly Fed Manufacturing Index. Estimate 21.5. Actual 26.2
• 8:30 US Unemployment Claims. Estimate 232K. Actual 245K
• 8:30 US Final GDP Price Index. Estimate 2.1%. Actual 2.1%
• 9:00 US HPI. Estimate 0.4%. Actual 0.5%
• 10:00 US CB Leading Index. Estimate 0.4%. Actual 0.4%
• 10:30 US Natural Gas Storage. Estimate -160B

Friday (December 22)

• 8:30 US Core Durable Goods Orders. Estimate 0.5%
• 8:30 US Durable Goods Orders. Estimate 2.1%
• 8:30 US Personal Spending. Estimate 0.5%
• 10:00 US New Home Sales. Estimate 654K
• 10:00  UoM Consumer Sentiment. Estimate 97.1

*All release times are GMT

*Key events are in bold

XAU/USD for Thursday, December 21, 2017

XAU/USD December 21 at 12:35 EST

Open: 1265.54 High: 1268.34 Low: 1262.89 Close: 1267.04

XAU/USD Technical

• XAU/USD has shown limited movement in the Thursday session
• 1260 is providing support
• 1285 is the next resistance line
• Current range: 1260 to 1285

Further levels in both directions:

• Below: 1260, 1240, 1213 and 1188
• Above: 1285, 1307 and 1337

OANDA’s Open Positions Ratio

XAU/USD ratio is showing slight movement towards short positions in the Thursday session. Currently, long positions have a majority (68%), indicative of trader bias towards XAU/USD continuing to move to higher ground.

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.