Gold Climbs to 4-Week High, US Data a Mixed Bag

Gold continues to move higher during Christmas week, and has climbed to its highest level since December 1. In North American trade, the spot price for an ounce of gold is $1286.97, up 0.33% on the day. There were two key events on Wednesday.  CB Consumer Confidence slowed to 122.2, well off the estimate of 128.2 points. Pending Home Sales posted a small gain of 0.2%, beating the estimate of -0.4%.

US housing numbers continue to beat expectations, as Pending Home Sales surprised the markets with a gain of 0.2%. Last week, Housing Starts came in at 1.30 million, beating the forecast of 1.25 million. On Tuesday, New Home Sales sparkled, with a gain of 733 thousand. This easily beat the estimate of 654 thousand, and was the highest reading since September 2007. On Thursday, the US releases unemployment claims, which is expected to drop to 241 thousand.

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 100%, which could give a boost to the US dollar. If the economy continues its impressive pace of growth above 3%, the Fed could raise rates up to four times in 2018. Despite strong economic conditions, the Federal Reserve’s inflation target of 2.0% remains elusive. Fed Chair Janet Yellen and other FOMC members have said that they expect that the strong labor market will lead to higher inflation. Although this is yet to materialize, of significance to the markets is the commitment of the Fed to press ahead with rate hikes despite low inflation.

XAU/USD Fundamentals

Wednesday (December 27)

• 10:00 US CB Consumer Confidence. Estimate 128.2. Actual 122.1
• 10:00 US Pending Home Sales. Estimate -0.4%. Actual +0.2%

Thursday (December 28)

• 8:30 US Unemployment Claims. Estimate 241K

*All release times are GMT

*Key events are in bold

XAU/USD for Wednesday, December 27, 2017

XAU/USD December 27 at 12:20 EST

Open: 1282.77 High: 1287.74 Low: 1281.35 Close: 1286.97

XAU/USD Technical

• XAU/USD was flat in the Asian session. The pair has posted small gains in the European and North American sessions
• 1285 has switched to a support role following gains by the pair on Wednesday. It remains a weak line
• 1307 is the next resistance line
• Current range: 1285 to 1307

Further levels in both directions:

• Below: 1285, 1260, 1240 and 1213
• Above: 1307, 1337 and 1375

OANDA’s Open Positions Ratio

In the Wednesday session, XAU/USD ratio is showing long positions with a majority (64%). This is 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.