Gold Close to $1090, US Consumer Inflation Report Next

Gold prices continues to have a quiet week, as the base metal trades at $1086.10 an ounce in Tuesday’s North American session. On the release front, it’s a quiet day in the US, with two minor indicators. US NAHB Housing Market Index met expectations. On Wednesday, the US releases two key events, CPI and Building Permits.

Gold has gained 2.2 percent in the month of January, as jittery investors have shunned risky assets in favor of safe-haven assets like gold. Events in China precipitated the kiwi’s woes, as the Chinese stock market meltdown and devaluation of the Chinese yuan spooked the markets. The bad news continued this week, as Chinese GDP for the fourth quarter showed another drop, dipping to 6.8%, shy of the forecast of 6.9%. Annual Chinese GDP for 2015 came in at 6.9%, the weakest annual gain in 25 years. Tensions throughout the Middle East have also contributed to gold moving higher in early 2016, as investors demonstrate little appetite for risk.

The Federal Reserve finally pressed the rate trigger in December, and the markets are looking for hints of the next interest rate increase. A rate hike at next week’s Fed policy meeting is not considered likely, coming so soon after the December move. A hike by the Fed in March is more probable, although this is contingent on a strong US economy. Although the economy is in good shape, one major area of concern is the inflation picture. Inflation levels have not kept up with other economic indicators and remain at low levels. Another concern is a lack of wage growth, despite a robust labor market. The Fed will be keeping a close eye on Wednesday’s CPI reports, and it’s a safe bet that policymakers will want to see stronger inflation numbers before signing on for another rate hike.

XAU/USD Fundamentals

Tuesday (Jan. 19)

  • 10:00 US NAHB Housing Market Index. Estimate 61 points. Actual 60 points
  • 16:00 US TIC Long-Term Purchases

Wednesday (Jan. 20)

  • 8:30 US Building Permits. Estimate 1.20M
  • 8:30 US CPI. Estimate 0.0%
  • 8:30 US Core CPI. Estimate 0.2%

*All release times are EST

*Key events are in bold

XAU/USD for Tuesday, January 19, 2016

Forex Rate Graph 21/1/13

XAU/USD January 19 at 11:50 GMT

Open: 1088.56 Low: 1082.51 High: 1094.60 Close: 1086.10

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1024 1043 1080 1098 1134 1151
  • XAU/USD posted slight gains in the Asian session but retracted in European trade. The pair is flat in the North American session.
  • There is resistance at 1098
  • 1080 is providing support
  • Current range: 1080 to 1098

Further levels in both directions:

  • Below: 1080, 1043 and 1024
  • Above: 1098, 1134, 1151 and 1175

OANDA’s Open Positions Ratio

The XAU/USD ratio is unchanged, indicative of the lack of movement from the pair. Long positions retain a solid majority (69%), indicative of strong trader bias towards gold prices continuing to move higher.

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 and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.