Gold Gains Ground as Weak Bonds Weigh on Dollar

Gold prices continue to move higher this week. In Tuesday’s North American trade, the spot price for an ounce of gold is $1326.90, up 0.32% on the day. There are no major events out of the US. On Wednesday, the US releases inflation and retail sales data. Traders should be prepared for some movement from XAU/USD during the North American session.

Gold headed lower last week, as the US dollar received a boost from a tumultuous week on global stock markets. Is the correction over? It’s too early too tell, but gold has posted gains in the Monday and Tuesday session, erasing most of last week’s losses. It’s no exaggeration to say that Wednesday’s inflation reports will be among the most important in recent memory, coming on the heels of the stock market meltdown. Much of the sell-off has been attributed to investor concerns over higher inflation, which could lead to a faster pace of rate hikes. If Wednesday’s inflation indicators are higher than expected, we can expect some volatility in gold prices and further sell-offs in the stock markets. The new head of the Federal Reserve, Jerome Powell, sought to send a reassuring message on Tuesday, saying that the Fed is on alert to any risks to financial stability. However, it’s clear that the Fed’s hand is limited when it comes to the volatile market movement which marked last week and could resume at any time.

XAU/USD Fundamentals

Tuesday (February 13)

• 6:00 US NFIB Small Business Index. Estimate 106.2. Actual 106.9
• 8:00 US FOMC Member Loretta Mester Speaks

Wednesday (February 14)

• 8:30 US CPI. Estimate 0.3%
• 8:30 US Core CPI. Estimate 0.2%
• 8:30 US Core Retail Sales. Estimate 0.2%
• 8:30 US Retail Sales. Estimate 0.5%

*All release times are EST

*Key events are in bold

XAU/USD for Tuesday, February 13, 2018

XAU/USD February 13 at 12:40 EST

Open: 1322.74 High: 1331.03 Low: 1321.68 Close: 1326.90

XAU/USD Technical

• XAU/USD posted gains in the Asian session. The pair continued to move higher in European trade but retracted. The pair is steady is choppy in North American trade
• 1307 is providing support
• 1337 is the next resistance line
• Current range: 1307 to 1337

Further levels in both directions:

• Below: 1307, 1285 and 1260
• Above: 1337, 1375, 1416 and 1433

OANDA’s Open Positions Ratio

XAU/USD ratio is showing some movement toward long positions. Currently, long and short positions are almost evenly split. This is indicative of a lack of trader bias as to what direction XAU/USD takes next.

This article 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 Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.