Gold Dips, Investors Eye Fed Announcement

Gold has headed lower in the Tuesday session. In North American trade, the spot price for an ounce of gold is $1311.30, down 0.45% on the day. On the release front, there are no US indicators on the schedule. on Wednesday, the US releases Current Account and Existing Home Sales. As well, the Federal Reserve is expected to raise interest rates for the first time in 2018.

Traders should be prepared for some volatility from gold prices this week, with the Federal Reserve poised to raise interest rates on Wednesday. This would mark the first hike of 2018. According to the CME Group, the odds of a quarter-point raise stand at an impressive 91 percent. What can we expect from the Fed during the year?  The current Fed projection remains at three hikes, but a robust US economy has raised speculation that the Fed could accelerate the pace to four hikes, which would be good news for the US dollar. Investors will be keeping a close eye on key US data, especially upcoming inflation indicators. If these numbers improve, we’re likely to see four rate hikes in 2018.

After months of rough rhetoric between Britain and the EU, the two sides announced that there would be a transition period following the UK’s departure from the EU in March 2019. The transition deal will kick in at that time, lasting until December 2020. The deal covers the rights and status of EU citizens in the UK and British citizens in the EU, and allows the UK to pursue new trade agreements during that time. There are still some issues to iron out, such as the Northern Ireland border. The transition period is a major, positive development, in that it will enable Britain to enjoy the benefits of the common market, albeit without a seat at the table. The positive news could raise investor risk appetite and weigh on gold prices.

 

XAU/USD Fundamentals

Tuesday (March 20)

  • There are no US events

Wednesday (March 21)

  • 8:30 US Current Account. Estimate -125B
  • 10:00 US Existing Home Sales. Estimate 5.41M
  • 14:00 US FOMC Economic Projections
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <1.75%
  • 14:30 US FOMC Press Conference

*All release times are GMT

*Key events are in bold

XAU/USD for Tuesday, March 20, 2018

XAU/USD March 20 at 12:50 EST

Open: 1317.09 High: 1318.38 Low: 1307.21 Close: 1311.30

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1260 1285 1307 1337 1375 1416
  • XAU/USD posted small losses in the Asian session. The pair showed little movement in European trade and has posted gains in North American trade
  • 1307 is providing weak 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

XAU/USD ratio is showing little movement in the Tuesday session. Currently, long positions have a majority (58%), indicative of trader bias towards XAU/USD reversing directions and moving 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.