XAU/USD – Gold Subdued as US Consumer Numbers Meet Expectations

Gold has edged higher on Monday, as the metal trades at $1323.86 in the North American session. On the release front, Personal Spending gained 0.3%, while Personal Income rose 0.4%, as both indicators matched the forecast. On Tuesday, the US will release CB Consumer Confidence, a key indicator.

The Federal Reserve hosted a meeting of central bankers in Jackson Hole late last week, and the highlight of the summit was a speech from Janet Yellen on Friday. The Fed chair was crystal clear in her remarks, saying the case for a rate increase had “strengthened in recent months”. Yellen noted that the economy was close to maximum employment, inflation was steady, and consumer spending remained solid. At the same time, Yellen did not provide any timeline on a rate hike nor did she spell out what the Fed wants to see before pressing the rate trigger. On Friday, Fed members Dennis Lockhart and Stanley Fischer both came out in favor of two rate hikes in 2016. Gold initially reacted to these messages from the Fed with strong gains, but was unable to consolidate and ended the Friday session unchanged. Although the Fed has revived the possibility of a September hike, a December move is considered much more likely, with odds as high as 65% according to Goldman Sachs. However, given that any move by the Fed will be data-dependent, plenty can still happen before the Fed holds its policy meeting on September 21. As gold is sensitive to interest rate moves, further speculation about whether the Fed will raise rates will likely result in volatility in gold prices.

US Preliminary GDP brought no surprises, as the economy grew by 1.1%, matching the forecast. On the manufacturing front, 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.

XAU/USD Fundamentals

Monday (August 29)

• 8:30 US Core PCE Price Index. Estimate 0.1%. Actual 0.1%
• 8:30 US Personal Spending. Estimate 0.3%. Actual 0.3%
• 8:30 US Personal Income. Estimate 0.4%. Actual 0.4%

Tuesday (August 30)

• 10:00 US CB Consumer Confidence. Estimate 97.2

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Monday, August 29, 2016

XAU/USD August 29 at 12:10 EDT

Open: 1320.74 High: 1325.00 Low: 1314.49 Close: 1323.86

XAU/USD Technical

• XAU/USD showed little movement in the Asian and European sessions. XAU/USD has posted small gains 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 showing little movement on Monday, consistent with the lack of movement from XAU/USD. Long positions have a strong majority (65%), indicative of trader bias towards XAU/USD breaking out 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.