Gold fall continues, $1200 next?

Gold prices continue to head south in the Monday session. In North American trade, the spot price for one ounce of gold is $1203.75, down 0.50% on the day. On the release front, there are no major releases out of the U.S. on the schedule.

A hawkish Federal Reserve statement sent gold prices lower last week, and solid inflation and consumer confidence data on Friday continue to weigh on gold. On Monday, gold touched a low of $1202.61, marking a 4-week low. On Friday, the Producer Price Index (PPI) jumped 0.6%, its sharpest gain since January 2017. This easily beat the estimate of 0.2%. Core PPI was also sharp, with a gain of 0.5%, compared to a gain of 0.2%. Stronger inflation will reinforce expectations that the Fed will hike rates hike in December. Currently, the odds of a quarter-percent rate hike stands at 76%. On the consumer front, UoM consumer sentiment dropped to 98.3, down from 99.0 points. Still, this beat the forecast of 98.0 points.

The Fed shows no signs of easing up on interest rate hikes, with Fed policymakers stating that interest rates will continue to rise until the “neutral rate” of between 2.5 percent and 3.5 percent is reached. This means we can expect rate hikes once a quarter in 2019, barring a sharp downturn in the economy. The policy of gradual increases is good news for the U.S dollar, and conversely bearish for gold prices, as higher interest rates means that the greenback is more attractive to investors.

XAU/USD Fundamentals

Monday (November 9)

  • Tentative – US Loan Officer Survey
  • 14:30 US FOMC Member Mary Daly Speaks

*All release times are EST

*Key events are in bold

XAU/USD for Monday, November 12, 2018

XAU/USD November 12 at 12:15 DST

Open: 1209.78 High: 1211.60 Low: 1202.61 Close: 1203.75

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1122 1146 1170 1204 1220 1236

XAU/USD showed little movement in the Asian session. The pair has headed lower in the European session and this has continued in North American trade

  • 1170 is providing support
  • 1204 is fluid. It is a weak resistance line.
  • Current range: 1170 to 1204

Further levels in both directions:

  • Below: 1170, 1146 and 1122
  • 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.