Gold subdued on lack of data, investors await durable goods orders, jobless claims

Gold prices have ticked lower in the Wednesday session. In North American trade, the spot price for one ounce of gold is $1229.02, down 0.11% on the day. In the U.S, New Home Sales dropped sharply to 553 thousand, well short of the estimate of 627 thousand. On Thursday, the U.S releases core durable goods orders and unemployment claims.

The Federal Reserve is widely expected to raise rates in December, which would mark the fourth rate hike this year. What can we expect in 2019? Many economists expect three rate hikes next year, and this was reinforced by Dallas Federal Reserve Bank President Robert Kaplan on Wednesday. Kaplan said he expects rates to rise into a range of 2.5% to 2.75%, or more likely, into a range of 2.75% to 3.00%. Kaplan noted that his estimate of a “neutral rate’ is slightly below 3% – anything above this level would move rates into a “restrictive’ stance, which could hamper economic growth and push inflation lower. The stock markets received a jolt this week as Chinese growth slipped to a 10-year low in the third quarter, and further weak numbers out of China could affect the U.S economy and cause the Fed to scale back its rate hike plans for 2019.

Gold has enjoyed a strong October, climbing 3.2% in that time. The base metal has not enjoyed such a strong month since January. Gold prices have moved higher in large part to an escalation in geo-political concerns, which have put a damper on risk appetite. These include the U.S-China trade war, the uproar over the killing of a Saudi journalist in Turkey and tense relations between Moscow and Washington. There are headaches in Europe as well, with concerns over the Italian budget and the Brexit negotiations. With no shortage of geo-political hot spots, safe-haven gold could continue to be a magnet for jittery investors.

 

XAU/USD Fundamentals

Wednesday (October 24)

  • 9:00 US HPI. Estimate 0.3%. Actual 0.3%
  • 9:45 US Flash Manufacturing PMI. Estimate 55.4. Actual 55.9
  • 9:45 US Flash Services PMI. Estimate 54.1. Actual 54.7
  • 10:00 US New Home Sales. Estimate 627K. Actual 553K
  • 10:30 US Crude Oil Inventories. Estimate 3.6M. Actual 6.3M
  • 13:00 US FOMC Member Raphael Bostic Speaks
  • 13:10 US FOMC Member Loretta Mester Speaks
  • 14:00 US Beige Book

Thursday (October 25)

  • 8:30 US Core Durable Goods Orders. Estimate 0.5%
  • 8:30 US Durable Goods Orders. Estimate -1.3%
  • 8:30 US Unemployment Claims. Estimate 214K

*All release times are DST

*Key events are in bold

XAU/USD for Wednesday, October 24, 2018

XAU/USD October 24 at 12:10 DST

Open: 1230.31 High: 1233.869 Low: 1225.782 Close: 1229.02

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1170 1204 1220 1236 1261 1284

XAU/USD edged higher but then retracted in the Asian session. In European trade, the pair posted gains but then retracted and headed lower. XAU/USD has been choppy in North American session

  • 1220 was tested earlier in support. It is a weak line
  • 1236 is the next resistance line
  • Current range: 1220 to 1236

Further levels in both directions:

  • Below: 1220, 1204, 1170 and 1146
  • Above: 1236, 1261 and 1284

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.