Gold Edges Higher, US GDP Ahead

Gold is steady on Tuesday, as the metal trades at a spot price of $1074.19 in the European session. In the US, all eyes are on Preliminary GDP. As well, the US will release CB Consumer Confidence. On Wednesday, there are two key major events – Core Durable Goods Orders and Unemployment Claims.

The guessing game continues, as the markets hunt for clues as to what we can expect from the Federal Reserve’s policy meeting in early December. Last week’s Fed minutes did not confirm a December rate hike, but most analysts feel that the long-awaited move will indeed occur next month. Market expectations have risen to 66% that the Fed will make a move next month, and recent comments by Fed policymakers have hinted that a rate move is a strong possibility. At the past two policy meetings, the vote against a rate hike was 9-1, but that clearly will not be the outcome at the December meeting. With the US economy showing improvement and employment and consumer indicators pointing upwards, the markets appear prepared for a small hike of 0.25% or 0.50%, and there is a growing view that modest, incremental moves would not cause unwanted turbulence on the global markets. One remaining question mark in the rate move puzzle is that of inflation levels. Recent inflation readings have been weak, and the Fed has repeatedly stated that inflation is a key consideration in any decision to raise rates. The markets will get a look at key inflation indicators shortly before the critical Fed policy meeting on December 16.

The economic slowdown in China and other emerging countries continues to affect markets worldwide, and one of the damaging results has been a sharp decline in commodity prices, including base metals such as gold. Somewhat surprisingly, gold has not been able to capitalize on its traditional reputation as a safe-haven in times of trouble, despite the attacks in Paris and terror alerts in France and other European countries. The precious metal has plunged since mid-October, losing some 9 percent of its value. There are a host of key releases, led by Preliminary GDP, prior to the Thanksgiving holiday, so we could see some volatility from XAU/USD during the week.

XAU/USD Fundamentals

Tuesday (Nov. 24)

• 13:30 US Preliminary GDP. Estimate 2.0%
• 13:30 US Goods Trade Balance. Estimate -61.8B
• 13:30 US Preliminary GDP Price Index. Estimate 1.2%
• 14:00 US S&P/CS Composite-20 HPI. Estimate 5.2%
• 15:00 US CB Consumer Confidence. Estimate 99.3 points
• 15:00 US Richmond Manufacturing Index. Estimate 0 points

Upcoming Key Events

Wednesday (Nov. 25)

• 13:30 US Core Durable Goods Orders. Estimate 0.5%
• 13:30 US Unemployment Claims. Estimate 273K

*Key releases are highlighted in bold

*All release times are GMT

XAU/USD for Tuesday, November 24, 2015

XAU/USD November 24 at 10:40 GMT

XAU/USD 1068 H: 1076 L: 1067

XAU/USD Technical

• XAU/USD posted losses in the Asian session and has been flat in the European session.
• 1080 is an immediate resistance line.
• 1043 remains a strong support level.
• Current range: 1043 to 1080

Further levels in both directions:

• Below: 1043, 1024 and 980
• Above: 1080, 1098, 1134 and 1151

OANDA’s Open Positions Ratio

XAU/USD ratio is showing little movement. Long positions continue to make up a strong majority (75%), indicative of strong trader bias towards gold prices 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.