XAU/USD – Gold Edges Lower to $1320 Ahead of Yellen Speech

Gold has posted small losses on Thursday, as the metal trades at $1321.79 in the North American session. On the release front, US durable goods reports easily beat expectations and unemployment claims dropped and beat the estimate. On Friday, the US releases Preliminary GDP and we’ll also hear from Federal Reserve chair Janet Yellen at the Jackson Hole conference.

Durable goods orders looked weak in the second quarter, but July’s numbers were excellent. Core Durable Goods Orders rebounded after two declines, posting an excellent gain of 1.5%. This easily beat the forecast of 0.4%. Durable Goods Orders also impressed with a sharp gain of 4.4%, compared to the forecast of 3.4%. This marked the strongest gain since January. The strong readings point to stronger demand for durable goods, which should translate into increased investment and hiring in the business sector. There was more good news on the labor front, as unemployment claims dropped to 261 thousand, its third decline in as many weeks.

Gold prices are sensitive to interest rate moves, so the markets will be closely monitoring the Jackson Hole summit, where central bankers and other senior policymakers are gathered for a 3-day summit. Federal policymakers are divided over whether the Fed should raise rates before the end of the year, as the US labor market is red-hot, but inflation levels remains very low. Currently, the odds of a September rate stand at 12% while the likelihood of a December hike is at 40%. Fed chair Janet Yellen will address the conference on Friday, and the markets will be looking for some feedback about the Fed’s take on the US economy – particularly the labor market and the inflation picture. As well, the US will release Preliminary GDP for the second quarter. In July, a soft Advance GDP sent the dollar downwards, as the economy expanded 1.2%, well short of the forecast of 2.6%. The estimate for the Preliminary GDP report stands at 1.1 percent. An unexpected reading could affect the dollar and cause some volatility in gold prices.

XAU/USD Fundamentals

Thursday (August 25)

• 8:30 US Unemployment Claims. Estimate 265K. Actual 261K
• 8:30 US Core Durable Goods Orders. Estimate 0.4%. Actual 1.5%
• 8:30 US Durable Goods Orders. Estimate 3.4%. Actual 4.4%
• 9:45 US Flash Services PMI. Estimate 51.9. Actual 50.9
• 10:30 US Natural Gas Storage. Estimate 22B. Actual 11B
• All Day – Jackson Hole Symposium

Friday (August 26)

• 8:30 US Preliminary GDP. Estimate 1.1%
• 10:00 Federal Reserve Chair Janet Yellen Speaks
• 10:00 US Revised UoM Consumer Sentiment. Estimate 90.6
• All Day – Jackson Hole Symposium

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Thursday, August 25, 2016

XAU/USD August 25 at 13:30 EDT

Open: 1325.89 High: 1327.17 Low: 1318.00 Close: 1321.79

XAU/USD Technical

• XAU/USD was flat in the Asian session and posted small losses in the European session. XAU/USD is showing little movement in North American trade
• There is resistance at 1331
• 1307 is providing support
• Current range: 1307 to 1331

Further levels in both directions:

• Below: 1307, 1279 and 1245
• Above: 1331, 1361, 1388 and 1416

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged on Thursday, consistent with the lack of movement from XAU/USD. Currently, long positions have a strong majority (63%), indicative of trader bias towards XAU/USD reversing directions and moving upwards. 

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.