Gold Edges Upwards as US Consumer Inflation Slips

Gold has edged higher in the Tuesday session. In North American trade, the spot price for an ounce of gold is $1326.52, up 0.27% on the day. In economic news, CPI and Core CPI both slowed to 0.2%. On Wednesday, the US releases key inflation and consumer spending reports, so we could see stronger movement in gold prices.

In the US, CPI dropped from 0.5% to 0.2%, and Core CPI edged lower to 0.2%, down from 0.3%. Lower inflation could have a significant impact on the Federal Reserve’s monetary policy. if inflation does not move upwards, the Fed could maintain its projection of three rate hikes in 2018. If, however, inflation moves closer to Fed’s inflation target of 2 percent, there is a stronger likelihood of four rate hikes this year.

The markets are keeping a close eye on the Federal Reserve, which holds its next policy meeting next week. The Fed is widely expected to raise rates for the first time this year at that meeting, but the real question is how many hikes we’ll see in 2018. The Fed projection remains at three rate hikes, but strong economic data could push the Fed to raise its forecast. Higher US interest rates makes the greenback more attractive to investors, so the number of rate hikes could have a strong impact on gold prices, which tend to move inversely with interest rate levels.

XAU/USD Fundamentals

Tuesday (March 13)

  • 6:00 US NFIB Small Business Index. Estimate 107.1. Actual 107.6
  • 8:30 US CPI. Estimate 0.2%. Actual 0.2%
  • 8:30 US Core CPI. Estimate 0.2%. Actual 0.2%
  • 13:01 US 30-year Bond Auction

Wednesday (March 14)

  • 8:30 US Core Retail Sales. Estimate 0.3%
  • 8:30 US PPI. Estimate 0.1%
  • 8:30 US Retail Sales. Estimate 0.3%
  • 8:30 US Core PPI. Estimate 0.2%

*All release times are GMT

*Key events are in bold

XAU/USD for Tuesday, March 13, 2018

XAU/USD March 13 at 12:30 EST

Open: 1322.93 High: 1327.70 Low: 1313.68 Close: 1326.52

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1260 1285 1307 1337 1375 1416
  • XAU/USD edged higher in the Asian session but then retracted. The pair was flat in European trade and has posted gains in North American trade
  • 1307 is providing support
  • 1337 is the next resistance line
  • Current range: 1307 to 1337

Further levels in both directions:

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

OANDA’s Open Positions Ratio

In the Tuesday session, the XAU/USD ratio is showing long positions with a majority (53%). This is indicative of trader bias towards XAU/USD continuing to move higher.

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.