Gold gains ground as Brexit turmoil continues with no-confidence vote

Gold is higher in the Wednesday session. In North American trade, the spot price for one ounce of gold is $1294.84, up 0.43% on the day. In economic news, there are no major U.S. indicators. On Thursday, the BoE releases the credit conditions survey and the U.S. posts unemployment claims.

The Federal Reserve has changed course on monetary policy, and is sending a much more dovish message compared to a few months ago. What is unusual is the significant discrepancy between current Fed forecasts and market expectations, which could result in volatility in the currency markets, as traders try to figure out what the Fed will do in 2019. The most recent projections from individual policymakers in the Federal Open Market Committee (FOMC) stands at two rate hikes this year, but the markets are expecting the Fed to hold pat and not raise rates in 2019. Moreover, the markets have priced in a rate cut before the end of the year at 28 percent. On Monday, former Fed Chair Janet Yellen said that she expected the Fed to take a breather, saying that it’s ‘very possible’ that the Fed has made its last hike of this cycle.

Risk appetite has improved in January, but a weaker Chinese economy could spook investors. On Monday, China released unexpectedly soft data, with exports down 4.4 percent from a year earlier and imports plunging 7.6 percent. The slowdown in China has taken a toll on corporate profits, with Apple and Jaguar Land Rover posting revenue warnings. Further signs of a slowdown from the world’s second largest economy could raise risk apprehension and bolster safe-haven gold.

Strong earnings from BoA and Goldman are driving risk appetite

XAU/USD Fundamentals

Wednesday (January 16)

  • 8:30 US Import Prices. Estimate -1.3%. Actual -1.0%
  • 10:00 US NAHB Housing Market Index. Estimate 56. Actual 58
  • 10:30 US Crude Oil Inventories. Estimate -1.4M. Actual -2.7M
  • 14:00 US Beige Book

Thursday (January 17)

  • 8:30 US Philly Fed Manufacturing Index. Estimate 9.7
  • 8:30 US Unemployment Claims. Estimate 219K

*All release times are EST

*Key events are in bold

XAU/USD for Wednesday, January 16, 2019

XAU/USD January 16 at 12:15 EST

Open: 1289.37 High: 1294991 Low: 1287.98 Close: 1294.80

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1236 1261 1284 1306 1326 1355

XAU/USD showed limited movement in the Asian session. In European trade, the pair edged higher but then gave up these gains. XAU/USD has posted considerable gains in the North American session.

  • 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

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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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