Gold Steady, Fed Rate Statement Next

Gold has posted slight gains on Wednesday, continuing the upward trend which has marked the past two daily sessions. Gold is trading at a spot price of $1248.13 an ounce in the North American session. On the release front, Pending Home Sales looked sharp, easily beating expectations with a gain of 1.4%. Today’s highlight is Federal Reserve’s monthly policy statement. The markets are not expecting any change to the current benchmark interest rate of 0.25%, but will be combing through the Fed’s statement. On Thursday, the US releases two key events – Advance GDP and Unemployment Claims.

Gold has looked sharp in the first quarter of 2016, posting gains of some 17 percent. This marked the base metal’s strongest quarter in 30 years, a reflection of turmoil in the global economy, which has seen a sharp slowdown in China and the continued collapse of oil prices. Traditionally, gold is a safe-haven asset in times of crisis, and has climbed sharply in recent months as investors with a reduced appetite for risk have snapped up the commodity. With the Fed widely expected to maintain interest rates at the current level of 0.25%, the markets will be carefully monitoring the tone of the policy statement and looking for clues about a possible rate hike in June. Janet Yellen has sounded cautious about the health of the US economy, and if the Fed continues on this path and sends out a dovish message, gold could post further gains at the expense of the dollar.

The US economy continues to expand, but there are some weak spots, including the manufacturing sector. Core Durable Goods dropped 0.2%, well off the estimate of a 0.6% gain. This marked the fourth decline in five months. Durable Goods Orders was stronger at 0.8%, but also missed expectations, as the estimate stood at 1.9%. Recent manufacturing reports, such as the Philly Fed Mfg. Index, have also been soft, as the industry has been hard-hit by weak global demand and a downturn in the US oil industry due to low crude prices.

XAU/USD Fundamentals

Wednesday (April 27)

  • 8:30 US Goods Trade Balance. Estimate -62.5B. Actual -56.9B
  • 10:00 US Pending Home Sales. Estimate 0.3%. Actual 1.4%
  • 10:30 US Crude Oil Inventories. Estimate 1.4M. Actual 2.0M
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <0.50%

Thursday (April 28)

  • 8:30 US Advance GDP. Estimate 0.7%.
  • 8:30 US Unemployment Claims. Estimate 258K

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Wednesday, April 27, 2016

XAU/USD April 27 at 12:40 EDT

Open: 1242.75 Low: 1242.50 High: 1251.07 Close: 1248.13

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1191 1205 1232 1255 1279 1303
  • There is resistance at 1255
  • 1232 is providing support.
  • Current range: 1232 to 1255

Further levels in both directions:

  • Below: 1232, 1205, 1191 and 1165
  • Above: 1255, 1279 and 1303

OANDA’s Open Positions Ratio

XAU/USD ratio shows long positions with a strong majority (61%). This is indicative of trader bias towards XAU/USD 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.