XAU/USD – Gold Unchanged as US Inflation Numbers Mixed, Jobless Claims Slide

Gold prices are almost unchanged on Thursday, continuing the lack of activity in Wednesday. In the North American session, the metal is trading at $1226.19. On the release front, there were a host of key events and the readings were mixed. CPI matched expectations at 0.4%, but Core CPI came in at 0.1% shy of the estimate of 0.2%. Unemployment Claims sparkled at 235 thousand, much lower than the estimate of 257 thousand. The Philly Fed Manufacturing Index dropped to 7.6 points, short of the forecast. On the housing front, Housing Starts remained unchanged at 1.23 million, above expectations. Later in the day, Fed chair Janet Yellen will testify about the economy before the Congressional Joint Economic Committee. With the Fed widely expected to raise interest rates next month, Yellen’s remarks will be closely watched in the markets.

U.S. Consumer Prices Post Largest Gain in 6 Months

As the after-shocks of the US election begin to subside, what can we expect from the US dollar? Currently, market sentiment appears very favorable towards the dollar, which is on a roll against most major currencies. A Trump presidency, bolstered by a Republican-controlled Congress) could signal a looser fiscal policy and significant tax cuts. If this scenario materializes, inflation would likely climb, leading to higher interest rates and hence a stronger dollar. At the same time, Trump remains an enigma – aside from being “pro-business”, his political and economic agendas are unclear. This lack of certainty means the markets could be in for plenty of surprises with Trump in office, which could translate into volatility in the currency and commodity markets.

With the Federal Reserve meeting for a policy meeting in December, expectations are sky-high that the Fed will press the trigger and raise rates by a quarter-point for the first time in a year. There have been several false starts before, but this time should be different. The Fed has sent out strong signals that it will raise rates, and in the past two rate decisions, some FOMC members voted for an immediate rate hike. The odds of a rate rise currently stand at a remarkable 90 percent, so barring some sharp negative data out of the US, we’ll see a rate hike before the end of 2016.

Yellen Testimony and Inflation Data Eyed

XAU/USD Fundamentals

Thursday (November 17)

• 8:30 US Building Permits. Estimate 1.19M. Actual 1.23M
• 8:30 US CPI. Estimate 0.4%. Actual 0.4%
• 8:30 US Core CPI. Estimate 0.2%. Actual 0.1%
• 8:30 US Philly Fed Manufacturing Index. Estimate 8.1 points. Actual 7.6 points
• 8:30 US Unemployment Claims. Estimate 257K. Actual 235K
• 8:30 US Housing Starts. Estimate 1.16M Actual 1.32M 
• 8:50 US FOMC Member William Dudley Speech
• 10:00 US Fed Chair Janet Yellen Testifies
• 10:30 US Natural Gas Storage. Estimate 34B
• 12:30 US FOMC Member Lael Brainard Speech

*All release times are EST

*Key events are in bold

XAU/USD for Thursday, November 17, 2016

XAU/USD November 17 at 12:30 EST

Open: 1226.77 High: 1231.49 Low: 1223.70 Close: 1226.43

XAU/USD Technical

• XAU/USD remains flat in the Thursday session
• 1223 remains a weak support line
• There is resistance at 1245
• Current range: 1223 to 1245

Further levels in both directions:

• Below: 1223, 1205 and 1174
• Above: 1245, 1279, 1290 and 1307

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Thursday session. Currently, long positions have a substantial majority (78%), indicative of trader bias towards XAU/USD breaking out and moving higher.

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.