Gold Trading Sideways Ahead of Fed Rate Statement

Gold has ticked lower in the Tuesday session. In North American trade, the spot price for an ounce of gold is $1339.51, down 0.13% on the day. On the release front, CB Consumer Confidence rose to 125.4, above the estimate of 123.2 points. Later on Tuesday, President Trump will deliver his State of the Union address before Congress. On Wednesday, there are a host of key indicators in the US, led by ADP Nonfarm Employment Change. The Federal Reserve will release a monetary policy statement, with the markets expecting the benchmark rate to remain unchanged at a range between 1.25%-1.50%.

Gold took advantage of last week’s USD selloff, but the dollar has steadied this week. Gold moved higher earlier on Tuesday, but these gains were mostly wiped out after a superb consumer confidence report. CB Consumer Confidence continues to move upwards, as the US consumer is showing strong optimism about the economy. This has triggered stronger consumer spending, which led to a surge of imports in Q4, weighing on Advance GDP, which was softer than expected at 2.6%.

All eyes are on the Federal Reserve, which will make a rate announcement on Wednesday, the final one under Janet Yellen’s watch. The tone of the rate statement could affect investor sentiment and have an impact on gold prices. It’s a virtual certainty that the Fed will leaves rates unchanged this time around, although it’s likely that the Fed will raise rates by a quarter-point at the March meeting. Yellen will make way for Jerome Powell, who takes over as chair in early February. Powell is expected to hold the course on monetary policy, which was marked by small, incremental interest rates in order to keep the robust US economy from overheating.

XAU/USD Fundamentals

Tuesday (January 30)

  • 9:00 US S&P/CS Composite-20 HPI. Estimate 6.3%. Actual 6.4%
  • 10:00 US CB Consumer Confidence. Estimate 123.2. Actual 125.4
  • 21:00 President Trump Speaks

Wednesday (January 31)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 191K
  • 8:30 US Employment Cost Index. Estimate 0.5%
  • 9:45 US Chicago PMI. Estimate 64.3
  • 10:00 US Pending Home Sales. Estimate 0.5%
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <1.50%

*All release times are GMT

*Key events are in bold

 

XAU/USD for Tuesday, January 30, 2018

XAU/USD January 30 at 13:00 EST

Open: 1349.77 High: 1352.50 Low: 1334. Close: 1338.60

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1285 1307 1337 1375 1416 1433
  • XAU/USD posted losses in the Asian session. XAU/USD recovered and moved higher in European trade. The pair has given up most of these gains in North American session
  • 1337 was tested earlier in support and is under pressure
  • 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 showing little movement in the Tuesday session. Currently, short positions have a majority (57%), indicative of trader bias towards XAU/USD continuing to lose 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.