Gold Remains Quiet Ahead of Fed Policy Meeting

Gold continues to have a quiet week. In the North American session, the spot price for one ounce is $1204.65. On the release front, US PPI dipped to 0.3%, above the estimate of 0.1%. We could see some movement from gold on Wednesday, as the US publishes CPI and retail sales reports. As well, the Federal Reserve is widely expected to raise the benchmark rate to 0.75 percent.

With the markets expecting a quarter-point rate hike on Wednesday, will gold react negatively to a Fed move? Although a rate hike has been priced in by the markets at 93%, there have been disappointments in the past, so a rate move could boost the dollar at the expense of gold. Strong US employment numbers in February have reinforced market speculation that the Fed will raise rates for the first time this year. Nonfarm payrolls sparkled in February, as the indicator jumped to 235 thousand, easily beating the estimate of 196 thousand. Wage growth climbed 2.6% compared to February 2016, while the participation rate edged up to 63.0%, up from 62.9%. These solid job numbers have also provided President Trump with a much-needed boost. Trump is under pressure to present an economic agenda, but the markets won’t mind giving him some additional breathing room, with the economy performing so well.

Gold Steady Ahead of March FOMC

XAU/USD Fundamentals

Tuesday (March 14)

• 8:30 US PPI. Estimate 0.1%. Actual 0.3%
• 8:30 US Core PPI. Estimate 0.2%. Actual 0.3%

Upcoming Key Events

Wednesday, March 15

• 8:30 US CPI. Estimate 0.0%
• 8:30 US Core CPI. Estimate 0.2%
• 8:30 US Core Retail Sales. Estimate 0.1%
• 8:30 US Retail Sales. Estimate 0.2%
• 14:00 US FOMC Economic Projections
• 14:00 US FOMC Statement
• 14:00 US Federal Funds Rate. Estimate <1.00%
• 14:00 US FOMC Press Conference

*All release times are GMT

*Key events are in bold

XAU/USD for Tuesday, March 14, 2017

XAU/USD March 14 at 13:00 EST

Open: 1202.15 High: 1207.69 Low: 1200.57 Close: 1204.65

XAU/USD Technical

• XAU/USD was flat in the Asian session and edged higher in the European session. The pair is steady in North American trade
• 1199 remains a weak support level
• 1232 is the next line of resistance
• Current range: 1199 to 1232

Further levels in both directions:

• Below: 1199, 1174 and 1146
• Above: 1232, 1260, 1285 and 1307

OANDA’s Open Positions Ratio

In the Tuesday session, XAU/USD ratio is showing long positions with a majority (69%). This is indicative of trader bias towards XAU/USD reversing directions continuing to move upwards.

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