Gold Dips Lower After Bullish Fed Statement

Gold has posted strong losses in the Thursday session, after recording strong gains on Wednesday. In North American trade, the spot price for an ounce of gold is $1327.54, down 0.35% on the day. On the release front, unemployment claims rose to 229 thousand, higher than the forecast of 225 thousand. On Friday, the US releases durable goods and housing reports.

Gold propelled to 2-week highs on Wednesday, following gains of over 1 percent. The base metal has reversed directions on Thursday, as the markets digest the Federal Reserve rate statement, which was somewhat hawkish. The Fed raised rates by a quarter-point on Wednesday, marking the first rate hike in 2018. he markets were looking for any clues with regard to the pace of rate hikes in 2018 – currently the Fed is projecting three hikes, but a robust US economy could push the Fed to press the rate trigger four times. The rate statement did not directly address the issue, but there was a refreshing lack of Fedspeak from policymakers, who said that “the economic outlook has strengthened in recent months”. This phrase has not been used in previous rate statements, and underscores a more hawkish stance from the Fed. The markets are expecting the Fed not to skip a beat, with the CME Group pricing another rate hike in May at 96%. This could translate into gains for the US dollar, at the expense of gold and other currencies.

 

XAU/USD Fundamentals

Thursday (March 22)

  • 8:30 US Unemployment Claims. Estimate 225K. Actual 229K
  • 9:00 US HPI. Estimate 0.4%. Actual 0.8%
  • 9:45 US Flash Manufacturing PMI. Estimate 55.4. Actual 55.7
  • 9:45 US Flash Services PMI. Estimate 55.9. Actual 54.1
  • 10:00 US CB Leading Index. Estimate 0.5%. Actual 0.6%
  • 10:30 US Natural Gas Storage. Estimate -88B. Actual -86B

Friday (March 23)

  • 8:30 US Core Durable Goods Orders. Estimate 0.5%
  • 8:30 US Durable Goods Orders. Estimate 1.6%
  • 10:00 US New Home Sales.  Estimate 621K

*All release times are DST

*Key events are in bold

XAU/USD for Thursday, March 22, 2018

XAU/USD March 22 at 12:45 EST

Open: 1332.23 High: 1335.04 Low: 1325.78 Close: 1327.54

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1260 1285 1307 1337 1375 1416
  • 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 slight gains in short positions. Currently, long and short positions are evenly split, indicative of a lack of trader bias towards XAU/USD.

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.