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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 [1]

XAU/USD Fundamentals

Wednesday (January 16)

Thursday (January 17)

*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.

Further levels in both directions:

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 [5]

Currency Analyst at Market Pulse [6]
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.