Gold Climbs Against Battered US Dollar, Hits 16-Week High

Gold has posted strong gains in the Wednesday session. In North American trade, the spot price for an ounce of gold is $13523.90, up 0.94% on the day. On the release front, Existing Home Sales disappointed, slowing to 5.57 million. This missed the forecast of 5.72 million. On Thursday, the US releases unemployment claims and New Home Sales.

The broad selloff of the US dollar continues, as major rivals such as the euro, pound and yen have posted strong gains on Wednesday. Gold has also jumped on the bandwagon, and has climbed 3.7% in the month of January. Gold has benefited from weaker appetite for risk, as global equity markets are lower. We could see more movement from gold later during the week, with the release on Friday of Advance GDP for the fourth quarter of 2016, as well as durable goods reports.

The US government shutdown lasted just three days, and only affected one working day. Still, the positive news didn’t boost the struggling US dollar. The funding agreement that Congress approved is little more than a band-aid solution, as it extends funding only until February 8. The Democrats held up a funding bill last week, in order to force the Republicans to the table over illegal immigration. The Republicans have promised to hold a vote on this issue, but many Democratic lawmakers remain skeptical that President Trump and the Republicans will deal in good faith over immigration. If the bipartisan efforts to reform immigration implodes, the government will again find itself without funds come next month. With many members of Congress up for re-election in November, lawmakers will be trying to avoid angering voters with a second shutdown next month.

 

XAU/USD Fundamentals

Wednesday (January 24)

  • 9:00 US HPI. Estimate 0.4%. Actual 0.4%
  • 9:45 US Flash Manufacturing PMI. Estimate 55.2. Actual 55.3
  • 9:45 US Flash Services PMI. Estimate 54.5. Actual 53.3
  • 10:00 US Existing Home Sales. Estimate 5.72M. Actual 5.57M
  • 10:30 US Crude Oil Inventories. Estimate -1.0M. Actual -1.1M

Thursday (January 25)

  • 8:30 US Unemployment Claims. Estimate 236K
  • 10:00 US New Home Sales. Estimate 676K

*All release times are GMT

*Key events are in bold

 

XAU/USD for Wednesday, January 24, 2018

XAU/USD January 24 at 12:40 EST

Open: 1341.26 High: 1355.76 Low: 1339.58 Close: 1353.90

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1285 1307 1337 1375 1416 1433
  • XAU/USD was flat in the Asian session. The pair posted strong gains in European trade. In the North American session, the pair posted slight gains but has retracted
  • 1337 is providing support
  • 1375 is the next line of resistance
  • Current range: 1337 to 1375

Further levels in both directions:

  • Below: 1337, 1307, 1285 and 1260
  • Above: 1375, 1416 and 1433

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Wednesday session. Currently short positions have a slim majority (52%), indicative of slight trader bias towards XAU/USD reversing directions and moving to lower 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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.