Gold Drops to 5-Week Low as Dudley Sends Hawkish Message

Gold has started the new trading week with losses. In North American trade,  XAU/USD is down 0.49%, with spot gold trading at $1248.74 per ounce. On the release front, there are no economic indicators. The sole events on the schedule are comments from FOMC members William Dudley and Charles Evans.

Gold prices dipped last week after the Fed’s hawkish rate statement, and the metal has started the week with losses, again courtesy of the FOMC. Earlier in the day, Federal Reserve of New York President Charles Dudley cautioned the Fed against halting its current tightening cycle. Dudley said that the economy was performing well, and reiterating the sentiment expressed in the rate statement, Dudley said that he was not concerned with inflation levels, which are at 1.5 percent (well below the Fed’s target of 2.0%). Dudley’s upbeat remarks have boosted the dollar and have pushed gold prices to their lowest level since May 15.

Friday’s US releases were a disappointment, as construction and consumer confidence reports missed expectations. Building Permits dropped to 1.17 million, its lowest level since August 2016. Housing Starts were also week, as the reading of 1.09 million marked the lowest since November 2016. There is concern that the soft construction numbers could weigh on second-quarter growth. There was more bad news from UoM Consumer Sentiment, which dipped to 94.7 in May, marking a 7-month low. This is significant, as it is the indicator’s lowest reading since President Trump took office, and points to consumer unease with how the US economy is being handled. There are troubling signs that the June UoM report could be even lower, coming after the Comey testimony which has damaged Trump’s credibility even further.

XAU/USD Fundamentals

Monday (June 19)

• 8:00 US FOMC Member William Dudley Speaks
• 19:00 US FOMC Member Charles Evans Speaks

*All release times are EDT

*Key events are in bold

XAU/USD for Monday, June 19, 2017

XAU/USD June 15 at 12:50 EST

Open: 1254.45 High: 1255.82 Low: 1247.41 Close: 1248.41

XAU/USD Technical

• XAU/USD posted slight losses in the Asian and European sessions. The pair is steady in North American trade
• 1232 is providing support
• 1260 is the next resistance line
• Current range: 1232 to 1260

Further levels in both directions:

• Below: 1232, 1199 and 1170
• Above: 1260, 1285, 1307 and 1337

OANDA’s Open Positions Ratio

In the Monday ratio, XAU/USD ratio is showing long positions with a majority (58%). This is indicative of XAU/USD reversing directions and climbing to higher levels. 

Content 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 Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.