$1300 Gold Pauses After Strong Week

Gold prices are unchanged in the Monday session. Currently, the spot price for an ounce of gold is $1303.94, up 0.04% on the day. On the release front, there are no major releases out of the US. The Empire State Manufacturing Index soared to 30.2 points, easily beating the estimate of 20.3 points. This was the indicator’s highest level since 2009.

Gold prices climbed 2.2 percent last week, as the metal closed on Friday above the symbolic $1300 level. The gold rally continued on Friday, as investors were disappointed that September CPI and Core CPI both missed their estimates. Low inflation levels continue to frustrate Fed policymakers, many who have predicted that a strong US economy and red-hot labor market will boost inflation levels. With inflation an important consideration in future rate decisions by the Federal Reserve, investors will be anxiously monitoring how Fed policymakers respond to September’s soft inflation numbers. So far, the soft inflation numbers have not affected the odds of  a December rate hike, as fed futures have currently priced a December hike at 91 percent.

The crisis over Catalan independence is at a deadlock, in if the situation escalates, nervous investors could dump euros in favor of safe assets such as gold. Last week, the Spanish government set a Monday deadline for Catalan President Carles Puigdemont to expressly state whether he had declared independence, and if so, Puigemont was given three more days to retract his proclamation. However, the Catalan President shirked away from a clear answer and let the first deadline pass, calling for more dialogue with Madrid. Prime Minister Mariano Rajoy has threatened to suspend the Catalan parliament and impose direct rule from Madrid, which could trigger a violent response. The crisis has led 500 companies to start leaving Catalonia, and the Standard and Poor’s rating agency has said that the region could face a recession if the crisis continues.

XAU/USD Fundamentals

Monday (October 16)

• 8:30 US Empire State Manufacturing Index. Estimate 20.3. Actual 30.2
• Tentative – US Federal Budget Balance. Estimate -1.0B

*All release times are GMT

*Key events are in bold

XAU/USD for Monday, October 16, 2017

XAU/USD October 16 at 11:15 EST

Open: 1303.25 High: 1305.93 Low: 1301.01 Close: 1303.94

XAU/USD Technical

• XAU/USD ticked lower in the Asian session but recovered in European trade. The pair is showing little movement in the North American session
• 1285 is providing support
• 1307 is a weak resistance line
• Current range: 1285 to 1307

Further levels in both directions:

• Below: 1285, 1260, 1240 and 1213
• Above: 1307, 1337 and 1367

OANDA’s Open Positions Ratio

XAU/USD ratio is showing little movement on Monday. Currently, long positions have a majority (68%), indicative of trader bias towards XAU/USD breaking out and moving to higher ground.

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