Gold Slightly Lower as Markets Digest Consumer Spending and Inflation Numbers

Gold prices have posted small losses in the Wednesday session. In the North American session, the spot price for an ounce of gold is $1278.34, down 0.14% on the day. On the release front, the focus was on consumer indicators. CPI and Core CPI matched the forecasts, with gains of 0.1% and 0.2%, respectively. Consumer spending reports were a mix – retail sales gained 0.1%, below the estimate of 0.2%. Core Retail Sales came in at 0.2%, beating the forecast of 0.0%. As well, the Empire State Manufacturing Index slowed to 19.4 points, well short of the estimate of 25.3 points. This reading marked a 4-month low.

Gold is showing volatility on Wednesday. The metal pushed to a high of $1289.50, its highest level since October 20. However, the metal has given up these gains in the North American session, after the release of retail sales and CPI. We could continue to see movement from gold, as investors keep a close eye on the tax overhaul bill which is on its way to Congress. If the bill gains steam, we are likely to see the dollar move higher, which could weigh on gold prices.

Although consumer price index numbers remain weak, there was better news from producer price index reports on Wednesday. Core PPI and PPI remained unchanged at 0.4%, beating their estimates. PPI increased at an annualized rate of 2.8%, its fastest gain since February 2012. Inflation levels are being closely monitored by the Federal Reserve, as stronger inflation levels would likely result in a rate hike in early 2018. The markets are very bullish on higher rates, with a December hike priced in at 93% and a January raise priced in at 89%.

The heads of central banks met on Tuesday at an ECB event, with a focus on communication with the markets and the public. Federal Reserve Chair Janet Yellen acknowledged that the FOMC committee of 19 members posed problems, as members did not always speak with a unified voice. This led to the markets picking up on differences between policymakers, often leading to market volatility. Yellen admitted that this problem would not be solved anytime soon, saying it was “a work in progress”.

XAU/USD Fundamentals

Wednesday (November 15)

• 3:00 US FOMC Member Charles Evans Speaks
• 8:30 US CPI. Estimate 0.1%. Actual 0.1%
• 8:30 US Core CPI. Estimate 0.2%. Actual 0.2%
• 8:30 US Retail Sales. Estimate 0.2%. Actual 0.1%
• 8:30 US Core Retail Sales. Estimate 0.0%. Actual 0.2% 
• 8:30 US Empire State Manufacturing Index. Estimate 25.3. Actual 19.4
• 10:00 US Business Inventories. Estimate 0.0%. Actual 0.0%
• 10:30 US Crude Oil Inventories. Estimate -2.1M. Actual +1.9M
• 16:00 US TIC Long-Term Purchases. Estimate 34.6B

Thursday (November 16)

• 8:30 US Unemployment Claims. Estimate 235K
• 8:30 US Philly Fed Manufacturing Index. Estimate 24.5

*All release times are GMT

*Key events are in bold

XAU/USD for Wednesday, November 15, 2017

XAU/USD November 15 at 12:25 EST

Open: 1280.07 High: 1289.60 Low: 1276.71 Close: 1277.93

XAU/USD Technical

• XAU/USD inched lower in the Asian session. The pair posted losses in the European session but has recovered in North American trade
• 1260 is providing support
• 1285 is the next resistance line
• Current range: 1260 to 1285

Further levels in both directions:

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

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Wednesday session. Currently, long positions have a majority (71%), indicative of trader bias towards XAU/USD breaking out and moving to higher ground.

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.