Gold has posted slight gains in the Wednesday session. In North American trade, the spot price for one ounce of gold is $1288.85, up 0.26% on the day. There are no major data releases, but the Federal Reserve will release the minutes of its December policy meeting, when the Fed raised rates by a quarter-point. Traders should treat this event as a market-mover. On Thursday, the U.S. releases unemployment claims and Fed Chair Powell will speak at an event in Washington.
Gold is sensitive to moves in interest rates, so we could see some stronger movement from XAU/USD after the release of the Fed minutes. At the December policy meeting, the Fed raised rates by a quarter-point, to a range between 2.25% and 2.50%. This ended a very aggressive 2018 for the Fed, which hiked rates four times. The December rate statement hinted that further rates were in the works for 2019, but a sharp drop in the stock markets has forced the Fed to adjust, and Fed Chair Powell was quite dovish in remarks last week, which were well received by investors. The Fed forecast is calling for two more hikes this year, but the markets are doubtful, with some analysts predicting a rate cut late in the year. It will be interesting to see the views of policymakers in the minutes and the reaction of the markets.
Investor optimism is higher this week, as hopes are high that trade tensions between the U.S. and China could ease. The world’s two largest economies have been engaged in a nasty tariff spat, which has rocked the markets in recent weeks and threatens to put a chill on global growth. Chinese and U.S. officials were scheduled to hold a two day meeting at the start of the week, but the talks were extended for a third day on Wednesday. This has raised hopes that the sides are making progress. The stakes are high, as President Trump has threatened to impose higher tariffs on $250 billion worth of Chinese products if there is no deal by March 1. The success of these talks could have a significant impact on gold prices. If a deal is reached, investor optimism would soar, and safe-haven gold would likely fall. Conversely, if the new tariffs take effect in March, gold prices would likely move higher.
Tuesday (January 8)
- 5:20 US NFIB Small Business Index. Estimate 103.1. Actual 104.4
- 10:00 US JOLTS Job Openings. Estimate 7.07M. Actual 6.89M
- 15:00 US Consumer Credit. Estimate 17.3B
- 21:00 US President Trump Speaks
Wednesday (January 9)
- 14:00 US FOMC Meeting Minutes
*All release times are EST
*Key events are in bold
XAU/USD for Wednesday, January 9, 2019
XAU/USD January 9 at 12:15 EST
Open: 1284.32 High: 1295.16 Low: 1282.73 Close: 1288.85
XAU/USD edged lower in the Asian session. The pair was flat in European trade and has posted considerable gains in North American trade
- 1284 is providing support
- 1306 is the next resistance line
- Current range: 1284 to 1306
Further levels in both directions:
- Below: 1284, 1261, 1236 and 1220
- Above: 1306, 1326 and 1355
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