Gold on Sidelines as markets eye Fed Minutes

Gold is unchanged in the Wednesday session. In North American trade, the spot price for one ounce of gold is $1196.40, down 0.02% on the day. On the release front, Existing Homes dropped to 5.34 million, short of the estimate of 5.38 million. This points to a worrying trend, as the indicator has now lost ground for a fourth straight month.  Today’s key event is the Federal Reserve minutes from the August 1 policy meeting. On Thursday, the U.S releases unemployment claims.

Gold prices are sensitive to interest rate moves, so the Fed minutes could lead to some movement from gold prices, which have been subdued on Wednesday. The Fed statement from that meeting described the economy as “strong”, the first time it used that term since 2006. Fed policymakers reiterated their commitment to raise interest rates gradually, as economic conditions remain strong. In the second quarter, GDP grew 4.1%, inflation has moved closer to the Fed’s target of 2%, and unemployment remains at record lows. The minutes are expected to underscore the Fed’s intent to raise rates twice more this year, in September and December. The Fed’s approach to rate hikes appears economically sound, but President Trump criticized the Fed this week, saying he was “not thrilled” with higher rates. Still, the Fed is widely expected to raise rates twice more this year, in September and December.

 

XAU/USD Fundamentals

Wednesday (August 22)

  • 10:00 US Existing Home Sales. Estimate 5.44M
  • 10:30 US Crude Oil Inventories. Estimate -1.6M
  • 14:00 US FOMC Meeting Minutes

Thursday (August 23)

  • 8:30 US Unemployment Claims 215K
  • Day 1 – Jackson Hole Symposium

*All release times are DST

*Key events are in bold

 

XAU/USD for Wednesday, August 22, 2018

XAU/USD August 22 at 12:20 DST

Open: 1195.83 High: 1201.72 Low: 1192.66 Close: 1195.87

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1115 1146 1170 1204 1220 1236

XAU/USD was flat in the Asian and European sessions. The pair has posted small losses in North American trade

  • 1170 is providing support
  • 1204 is the next resistance line
  • Current range: 1170 to 1204

Further levels in both directions:

  • Below: 1170, 1146 and 1115
  • Above: 1204, 1220 and 1236

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.