XAU/USD – Gold Unchanged as US Inflation Data Steady

Gold prices are almost unchanged on Wednesday. In the North American session, the spot price for one ounce is $1213.67. On the release front, today’s highlights were CPI and Core CPI, which both matched their estimates. On Thursday, the US will release three key indicators – Building Permits, Philly Fed Manufacturing Index and Unemployment Claims.

There were no surprises from US consumer inflation numbers in December. CPI, the primary gauge of consumer inflation, edged up to 0.3%, while Core CPI remained unchanged at 0.2%. Both indicators matched the forecasts. Inflation levels are close to the Federal Reserve’s target of two percent, which means that policymakers will likely stick to their plan of gradual, modest rate hikes in 2017. However, the Fed is not expected to raise rates at its next meeting on February 1, so soon after raising rates in December for the first time in 12 months.

Ahead of Inauguration Day on Friday, there is a feeling of unease on the part of the markets. Donald Trump’s upset election victory in November was warmly received by the markets, as the stock market and the US dollar have climbed higher. However, confidence and hope are starting to give way to confusion and uncertainty, as Trump has failed to outline any specifics on his economic policies, while continuing to tangle with the media and fire off controversial Twitter messages. Trump’s comments earlier this week about the US dollar helped send the currency lower. In an interview with the Wall Street Journal on Monday, Trump complained that the currency was “too strong”. These sentiments were echoed on Tuesday by Trump advisor Anthony Scaramucci. Speaking at the World Economic Forum in Davos, Scaramucci warned that “we must be careful of a rising dollar.” Trump broke with the unwritten rule that US presidents refraining from commenting on the US dollar, and his comments could be a taste of more to come, as Trump is unlikely to veer from his habit of making controversial comments that could affect market movement.

Trump Intervenes With Dollar Rhetoric

XAU/USD Fundamentals

Wednesday (January 18)

• 8:30 US CPI. Estimate 0.3%. Actual 0.3%
• 8:30 US Core CPI. Estimate 0.2%. Actual 0.2%
• 9:15 US Capacity Utilization Rate. Estimate 75.6%. Actual 75.5%
• 9:15 US Industrial Production. Estimate 0.8%. Actual 0.8%
• 10:00 US NAHB Housing Market Index. Estimate 69 points. Actual 67 points
• 11:00 US FOMC Member Neel Kasharki Speech
• 14:00 US Beige Book
• 15:00 US Federal Reserve Chair Yellen Speech
• 16:00 US TIC Long-Term Purchases. Estimate 21.3B

Upcoming Key Events

Thursday (January 19)

• 8:30 US Building Permits. Estimate 1.22M
• 8:30 US Philly Fed Manufacturing Index. Estimate 16.3
• 8:30 US Unemployment Claims. Estimate 252K

XAU/USD for Wednesday, January 18, 2017

XAU/USD January 18 at 13:00 EST

Open: 1214.96 High: 1217.59 Low: 1209.94 Close: 1213.67

XAU/USD Technical

• XAU/USD has showed minimal movement in the Wednesday session
• 1199 is providing support
• 1232 is the next resistance line
• Current range: 1199 to 1232

Further levels in both directions:

• Below: 1199, 1174, 1146 and 1130
• Above: 1232, 1260 and 1285

OANDA’s Open Positions Ratio

XAU/USD ratio remains unchanged this week. Currently, long positions command a strong majority (71%). This is indicative of trader bias towards XAU/USD breaking out and climbing to higher levels.

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