Struggling gold breaks below $1200 level

Gold is showing little movement in the Wednesday session. In North American trade, the spot price for one ounce of gold is $1202.54, up 0.03% on the day. On the release front, CPI improved to 0.3%, its strongest gain since January. This matched the estimate. Core CPI improved to 0.2%, also matching the forecast. Thursday will be busy, with the U.S releasing retail sales, the Philly Fed Manufacturing Index and unemployment claims.

Gold prices continue to struggle in November. The metal dropped below the symbolic $1200 level on Tuesday and again in the Wednesday session. On Tuesday, gold dropped to a low of $1196, marking its lowest level since October 8. Global stock markets have been under pressure, as trouble spots such as U.S-China relations, Brexit and the Italian budget crisis have unnerved investors, but gold has failed to take advantage. A hawkish Fed has also led to investors snapping up U.S. dollars. On Wednesday, gold has not shown much response to consumer inflation numbers, which edged higher in October. With the U.S. economy firing on all cylinders and the dollar looking strong, gold could continue to face headwinds during November.

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 mean that the greenback is more attractive to investors.

 

XAU/USD Fundamentals

Wednesday (November 14)

  • 8:30 US CPI. Estimate 0.3%. Actual 0.3%
  • 8:30 US Core CPI. Estimate 0.2%. Actual 0.2%
  • 10:00 US FOMC Member Quarles Speaks
  • 18:00 US Fed Chair Powell Speaks

Thursday (November 15)

  • 8:30 US Core Retail Sales. Estimate 0.5%
  • 8:30 US Retail Sales. Estimate 0.6%
  • 8:30 US Philly Fed Manufacturing Index. Estimate 20.7
  • 8:30 US Unemployment Claims. Estimate 216K
  • 11:30 US Fed Chair Powell Speaks

*All release times are EST

*Key events are in bold

 

XAU/USD for Wednesday, November 14, 2018

XAU/USD November 14 at 11:15 EST

Open: 1202.15 High: 1204.63 Low: 1197.76 Close: 1202.54

 

XAU/USD Technical

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

XAU/USD ticked higher in the Asian session. In European trade, the pair edged lower but recovered most of these losses. The pair is showing choppiness in the North American session

  • 1170 is providing support
  • 1204 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.