Gold Inches Higher, Markets Await FOMC Speeches

Gold has started the week quietly. In the North American session, gold is trading at $1234.12 an ounce. On the release front, there are no economic events. President Trump will speak at an event in Louisville, Kentucky. As well, FOMC member Charles Evans will deliver a speech in New York City.

The Federal Reserve raised rates by a quarter-point last week, but the US dollar responded with broad losses. Why the negative reaction from the greenback? Firstly, there was disappointment in the markets with the Fed policy statement, which was more dovish than expected. The rate move was priced in at over 90 percent, and there had been speculation that a red-hot US economy would propel the Fed to accelerate its pace of monetary tightening, with possibly four rate hikes this year. Instead, Fed Chair Janet Yellen reiterated that further rate hikes would be “gradual” and the Fed made no changes to its “dot plot”, with a projection for three rate hikes in 2017. As well, the US dollar may have lost ground due to traders and investors acting on “buy on rumor, sell on fact”.

What’s next for Janet Yellen & Co.? Analysts do not expect another rate move in May, while a hike in June is currently priced in at 50%. The markets will be looking for clues about the Fed’s monetary plans. A host of FOMC members will be speaking this weak, highlighted by Janet Yellen’s speech on Thursday at an event in Washington. The market will be looking for clues regarding monetary policy. In the past, Fed policymakers have presented conflicting positions, and if the market senses that there are divisions within the Fed, the US dollar could lose ground.

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Speeches Eyed as Central Banks Turn More Hawkish

XAU/USD Fundamentals

Monday (March 20)

• 13:10 US FOMC Member Charles Evans Speech
• 19:30 US President Trump Speech

*All release times are GMT

*Key events are in bold

XAU/USD for Monday, March 20, 2017

XAU/USD March 20 at 13:40 EST

Open: 1231.39 High: 1235.58 Low: 1230.00 Close: 1234.12

XAU/USD Technical

• XAU/USD has shown limited movement in the Monday session
• 1232 is a fluid line. Currently, it is a weak support line.
• 1260 is the next resistance line
• Current range: 1232 to 1260

Further levels in both directions:

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

OANDA’s Open Positions Ratio

In the Monday session, XAU/USD ratio is showing a majority of long positions (71%). This is indicative of trader bias towards XAU/USD continuing to climb higher.

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