XAU/USD – Gold Unchanged at $1200 Ahead of Fed Rate Announcement

Gold is trading quietly at the $1200 level in Wednesday’s North American session. On the release front, CPI and retail sales reports proved to be non-events, as the key consumer indicators eked out small gains in February. Later in the day, the Federal Reserve will issue a rate statement, with the markets widely expecting a rate hike for the first time in 2017. Thursday also promises to be busy, with the US releasing several major indicators, led by unemployment claims.

The markets are waiting and ready for the Federal Reserve to raise interest rates on Wednesday from 0.50% to 0.75%. Strong job numbers in February, led by a sparkling Nonfarm Payrolls report, have virtually cemented a March rate hike. A quarter-point hike is currently priced in at 93%, so it’s an open question if the expected rate move will affect the dollar. At the same time, the sheer magnitude of a rate move could have an impact on the markets and send gold prices lower, as the metal is sensitive to interest rate movement. With the labor market close to capacity and inflation moving higher, the Fed appears more comfortable in hiking rates for the second time in just three months. Still, Fed policymakers remain concerned that President Trump has so far failed to provide any specifics on his promises to reform the tax code and increase fiscal spending. The Fed will likely hike rates on Wednesday, with an eye towards additional small hikes during the year if the economy continues its impressive performance.

Gold Steady Ahead of March FOMC

XAU/USD Fundamentals

Wednesday (March 15)

• 8:30 US CPI. Estimate 0.0%. Actual 0.1%
• 8:30 US Core CPI. Estimate 0.2%. Actual 0.2%
• 8:30 US Core Retail Sales. Estimate 0.1%. Actual 0.2%
• 8:30 US Retail Sales. Estimate 0.2%. Actual 0.1%
• 8:30 US Empire State Manufacturing Index. Estimate 15.3. Actual 16.4
• 10:00 US Business Inventories. Estimate 0.3%. Actual 0.3%
• 10:00 US NAHB Housing Market Index. Estimate 65. Actual 71
• 10:30 US Crude Oil Inventories. Estimate 3.3M. Actual -0.2M
• 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
• 16:00 US TIC Long-Term Purchases. Estimate 13.4B

Upcoming Key Events

Thursday (March 16)

• 8:30 US Building Permits. Estimate 1.26M
• 8:30 US Philly Fed Manufacturing Index. Estimate 30.2
• 8:30 US Unemployment Claims. Estimate 245K

*All release times are GMT

*Key events are in bold

XAU/USD for Wednesday, March 15, 2017

XAU/USD March 15 at 13:00 EST

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

XAU/USD Technical

• XAU/USD has been marked by limited movement in the Wednesday
• 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

XAU/USD ratio is unchanged in the Wednesday session. Currently, long positions have a majority (69%), indicative of trader bias towards XAU/USD breaking out and moving upwards.

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