Gold Records Strong Gains on Monday

Gold has started the week with considerable gains. In the Monday’s North American session, spot gold is trading at $1291.75, up 0.57% on the day. There are no US events on the schedule, so we’re unlikely to see any significant movement for the remainder of the day.

It was a busy week for gold, as the metal responded to geopolitical events. Early in the week, gold prices dropped, as tensions between the US and North Korea eased after the escalating war of words raised fears of military engagement between the two enemies. This revived risk appetite on the part of investors. However, gold was again in demand after the terror attack in Barcelona, which killed 13 and wounded over 100. This triggered a flight from risk which saw gold hit the $1300 level, the first time that has happened since November 2016. Gold prices could rally higher if tensions in the Korean peninsula resume or if there is another terror attack in Western Europe.

The Federal Reserve all but promised three rate hikes in 2017, but those plans could be on hold. A rate hike is very unlikely before December, and even then the odds have been hovering below 50% for months (currently, the odds are pegged at 44%). With the markets unsure about the Fed’s rate policy, analysts will be carefully monitoring any comments from Fed policymakers. They won’t have to wait long, as central bankers gather in Jackson Hole, Wyoming on Wednesday. A possible rate hike is not the only issue the Fed has to deal with in the near future. The markets will be looking for guidance with regard to the Fed’s balance sheet of $4.2 trillion. Policymakers have said they plan to start reducing the balance sheet this year, and the trimming could begin as early as next month. A reduction in the balance sheet should benefit the dollar, as a trim of $60 billion is equivalent to a rate increase of 25 basis points. No less important is the psychological aspect of a reduction, which would represent a vote of confidence by the Federal Reserve in the strength of the US economy.

Traders Eye Jackson Hole Event This Week

XAU/USD Fundamentals

Monday (August 21)

  • There are no US events

XAU/USD for Monday, August 21, 2017

XAU/USD August 21 at 13:00 EST

Open: 1284.52 High: 1294.08 Low: 1280.61 Close: 1291.98

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1232 1260 1285 1307 1337 1367
  • XAU/USD showed little movement in the Asian session. The pair posted gains in the European session and is steady in North American trade
  • 1285 is a weak support level
  • 1307 is the next resistance line
  • Current range: 1285 to 1307

Further levels in both directions:

  • Below: 1285, 1260, 1232, 1199 and 1170
  • Above: 1307, 1337 and 1367

OANDA’s Open Positions Ratio

In the Monday session, XAU/USD ratio is showing long positions with a slight majority (51%), indicative of a lack of bias as to what direction XAU/USD will take next.

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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.