XAU/USD – Gold Slides as US Durables, Consumer Confidence Beat Estimates

After an uneventful start to the week, gold prices have dropped sharply on Wednesday. In the North American session, the metal is trading at $1189.28. In economic news, there were a host of key releases. Core Durable Goods Orders rose 1.0% and Durable Goods Orders jumped 4.8%, as both indicators easily beat their estimates. UoM Consumer Sentiment climbed to 93.8, above expectations. However, other indicators were not as positive. Unemployment Claims were higher than expected, at 251 thousand. New Home Sales slipped to 563 thousand, well below the forecast. Later in the day, we’ll get a look at the FOMC minutes from the November policy meeting.

Gold prices have declined 1.9 percent on Wednesday, dropping below the symbolic level of $1200. Since the US election earlier this month, the dollar has surged, and this has come at the expense of gold, which has plunged 7.7 percent during that period. With a rate hike in December a near-certainty, sentiment towards the dollar should remain high and gold prices could continue to head downwards. However, the uncertainty swirling around Donald Trump’s economic agenda could help the safe-haven metal lick its wounds and move higher in the coming weeks. Trump’s election promises of more spending and less taxes have been vague and we will have to wait for the new Trump administration to unveil a detailed economic platform. The Federal Reserve is in favor of gradual rate hikes next year, but this plan is based on the assumption that the US economy will continue to strengthen. In testimony before a congressional committee last week, Fed chair Janet Yellen acknowledged the uncertainty created by Trump’s victory and said that the Fed might have to adjust its outlook, based on the new administration’s economic policies.

XAU/USD Fundamentals

Wednesday (November 23)

• 8:30 US Core Durable Goods Orders. Estimate 0.2%. Actual 1.0%
• 8:30 US Unemployment Claims. Estimate 241K. Actual 251K
• 8:30 US Durable Goods Orders. Estimate 1.2%. Actual 4.8%
• 9:00 US HPI. Estimate 0.5%. Actual 0.6%
• 9:45 US Flash Manufacturing PMI. Estimate 53.6. Actual 53.9
• 10:00 US New Home Sales. Estimate 591K. Actual 563K
• 10:00 US Revised UoM Consumer Sentiment. Estimate 91.6. Actual 93.8
• 10:00 US Revised UoM Inflation Expectations. Actual 2.4%
• 10:30 US Crude Oil Inventories. Estimate 0.3M. Actual -1.3M
• 12:00 US Natural Gas Storage. Estimate 7B
• 14:00 US FOMC Meeting Minutes

*All release times are EST

*Key events are in bold

XAU/USD for Wednesday, November 23, 2016

XAU/USD November 23 at 13:30 EST

Open: 1212.91 High: 1215.02 Low: 1181.70 Close: 1189.28

XAU/USD Technical

• XAU/USD was flat in the Asian and European sessions. The pair has posted sharp losses in North American trade
• 1174 is a support line
• 1205 has switched to a resistance role following sharp losses by XAU/USD
• Current range: 1174 to 1205

Further levels in both directions:

• Below: 1174 and 1146 and 1130
• Above: 1205, 1223, 1245 and 1279

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Wednesday session. Currently, long positions have a substantial majority (81%). This is indicative of trader bias towards XAU/USD reversing directions and moving to higher levels.

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.