Gold unchanged as PPI matches forecast, CPI next

Gold remains steady, after recording sharp losses at the start of the week. The metal lost ground earlier on Wednesday but has recovered. In North American trade, the spot price for one ounce of gold is $1189.22, down 0.04% on the day. On the release front, PPI and Core PPI both gained 0.2%, matching the estimate. These inflation readings were the strongest gains since June. On Thursday, the U.S will release CPI, unemployment claims and the U.S Treasury currency report.

After a rocky start to the week, gold prices have been steady. Still, gold prices remain under pressure. The U.S economy in excellent shape and inflation growing higher, and that has allowed the Federal Reserve to stay on track with gradual increases in interest rates. In October, the Fed raised rates for a third time this year, and the odds of a December rate are pegged at 81%, according to the CME Group. Furthermore, the Fed indicated that three more rate hikes are on the way in 2019. This vote of confidence in the economy has strengthened the U.S dollar and conversely, weighed on gold prices. Since June 1, gold has fallen some 8.4%, and the trend has been all downwards – the base metal has failed to produce a winning month since March.

Will there be any surprises in the U.S Treasury currency report? The report provides details of global exchange rate policies, as well as a list of countries which are deemed currency manipulators. In the April report, the U.S did not name any of its major partners as currency manipulators. Since then, the Trump administration has imposed some $200 billion in tariffs on Chinese goods. China has retaliated with its own tariffs on U.S goods, and there has been speculation that China could respond to the U.S tariffs by devaluating the Chinese yuan in order to bolster Chinese exports. In 2015 and 2016, the markets dropped sharply on fears that China would implement a major devaluation of its currency. Traders should treat the report as a market-mover.

U.S producer prices increase for first time in three months

European update – GBP/USD pares gains after data

XAU/USD Fundamentals

Wednesday (October 10)

  • 8:30 US PPI. Estimate 0.2%. Actual 0.2%
  • 8:30 US Core PPI. Estimate 0.2%. Actual 0.2%
  • 10:00 US Final Wholesale Inventories. Estimate 0.8%
  • 13:01 US 10-year Bond Auction
  • Tentative – US Treasury Currency Report
  • 18:00 US FOMC Raphael Bostic Speaks

Thursday (October 11)

  • 8:30 US CPI. Estimate 0.2%
  • 8:30 US Core CPI. Estimate 0.2%
  • 8:30 US Unemployment Claims. Estimate 207K

*All release times are DST

*Key events are in bold

XAU/USD for Wednesday, October 10, 2018

XAU/USD October 10 at 12:30 DST

Open: 1189.74 High: 1191.42 Low: 1185.37 Close: 1189.22

XAU/USD Technical

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

XAU/USD was mostly flat in the Asian session. The pair edged lower in European trade but has recovered 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, 1236 and 1261

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.