Gold Steady Ahead of Fed Rate Statement

Gold has posted slight gains in the Wednesday session. In North American trade, the spot price for an ounce of gold is $1341.29, up 0.20% on the day. On the release front, ADP Nonfarm Payrolls slowed to 234 thousand, but this was much stronger than the estimate of 186 thousand. As well, Pending Home Sales improved to 0.5%, matching the estimate. Later in the day, the Federal Reserve will release a rate statement, and is expected to hold rates at a range between 1.25% -1.50%. On Thursday, the US releases two key indicators – unemployment claims and the ISM Manufacturing PMI.

Gold is down slightly this week, as the dollar has steadied following last week’s USD selloff. Since the start of the year, gold is up 2.2%, joining the major currencies which have posted gains against the greenback in 2018. This has been somewhat of a surprise, as a strong US economy has supported risk appetite, yet investors have not abandoned the yellow metal early in 2018.

The Federal Reserve will be in the spotlight later on Wednesday, with the release of rate statement, the final one under Janet Yellen’s watch. The tone of the statement could affect investor sentiment and have a substantial impact on the direction of gold. It’s a virtual certainty that the Fed will leaves rates unchanged this time around, although it’s likely that the Fed will raise rates by a quarter-point at the March meeting. Yellen will make way for Jerome Powell, who takes over as chair in early February. Powell is expected to hold the course on monetary policy, which was marked by small, incremental interest rates in order to keep the robust US economy from overheating.

XAU/USD Fundamentals

Wednesday (January 31)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 191K
  • 8:30 US Employment Cost Index. Estimate 0.5%
  • 9:45 US Chicago PMI. Estimate 64.3
  • 10:00 US Pending Home Sales. Estimate 0.5%
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <1.50%

*All release times are GMT

*Key events are in bold

XAU/USD for Wednesday, January 31, 2018

XAU/USD January 31 at 12:25 EST

Open: 1338.55 High: 1345.25 Low: 1336.55 Close: 1341.29

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1285 1307 1337 1375 1416 1433
  • XAU/USD posted slight gains in the Asian and European sessions, but has edged lower in North American trade
  • 1337 was tested earlier in support and is under pressure
  • 1375 is the next line of resistance
  • Current range: 1337 to 1375

Further levels in both directions:

  • Below: 1337, 1307, 1285 and 1260
  • Above: 1375, 1416 and 1433

OANDA’s Open Positions Ratio

XAU/USD ratio is showing little movement in the Wednesday session. Currently, short positions have a majority (59%), indicative of trader bias towards XAU/USD reversing directions and moving lower.

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.