Streaking gold hits 8½ month high, Fed statement looms

Gold prices are considerably higher on Tuesday. In North American trade, the spot price for one ounce of gold is $1310.74,up 0.60% on the day. In economic news, CB Consumer Confidence missed expectations. The indicator dropped sharply to 120.5, short of the forecast of 125.2 points. On Wednesday, the Federal Reserve will publish its monthly rate statement, with the Fed expected to maintain the benchmark rate.

Gold prices continue to shine. The metal has climbed 2.2% percent in January, after gains of close to 5.0% a month earlier. On Tuesday, gold climbed above$1311, for the first time since early May. Geopolitical hot spots such as the U.S-China trade war, Brexit and the U.S government shutdown have dampened risk appetite and boosted gold, a traditional safe-haven. With the U.S. and China still far apart on a deal to remove punishing tariffs, the honeymoon with gold could continue.

The Federal Reserve was aggressive in 2018, raising rates by a quarter-point on four occasions. With a nasty trade war dampening global economic growth, it is clear that the Fed will ease up on monetary policy this year. But, by how much? There are a various answers, depending on who you ask. The markets are not expecting any increases this year, while the Federal Reserve continues to stick with a forecast of two hikes. The Congressional Budget Office (CBO) has also weighed in, saying that it expects further rate increases this year. The CBO made the forecast in its 10-year outlook update, but did not specify how many hikes. The CBO report projected growth of 2.3% for the U.S economy in 2019, matching the forecast of the Federal Reserve.

US lower as Huawei charges threaten trade talks

Gold prices head for 8 ½-month high

XAU/USD Fundamentals

Tuesday (January 29)

  • 10:00 US CB Consumer Confidence. Estimate 125.0. Actual 120.2

Wednesday (January 30)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 170K
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <2.50%
  • 14:30 US FOMC Press Conference

*All release times are EST

*Key events are in bold

XAU/USD for Tuesday, January 29, 2019

XAU/USD January 29 at 11:05 EST

Open: 1303.20 High: 1311.86 Low: 1297.77 Close: 1310.74

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1261 1284 1306 1326 1344 1365

In the Asian session, XAU/USD was flat. The pair posted gains in European trade and the upward move continues in North American trade

  • 1306 has switched to a support role after gains by XAU/USD on Tuesday
  • 1326 is the next resistance line
  • Current range: 1306 to 1326

Further levels in both directions:

  • Below: 1306, 1284, 1261 and 1236
  • Above: 1326, 1344 and 1365

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.