Gold Steadies After Slipping Below $1300

Gold is trading sideways in the Wednesday session, after sharp losses on Tuesday. In North American trade, the spot price for one ounce of gold is $1290.61, down 0.03% on the day. On the release front, construction numbers were mixed. Building Permits remained steady at 1.35 million, matching the forecast. Housing Starts dropped to 1.29 million, short of the estimate of 1.32 million. On Thursday, the U.S releases Philly Fed Manufacturing Index and unemployment claims.

In the U.S, retail sales and core retail sales posted gains in April, although both indicators fell short of the estimates. Still, consumer spending is improving after a sluggish first quarter. Investors liked what they saw, and the US dollar was broadly higher on Tuesday. At the same time, a new concern is higher gas prices, which could put a dent in consumers’ wallets and hurt spending. Oil prices have hit their highest levels in over 3 years, and with the US leaving the Iran nuclear deal and escalating tensions in the Middle East, gasoline prices could remain at high levels.

The U.S economy continues to perform well, but the Federal Reserve target of 2 percent remains elusive. CPI rebounded with a gain of 0.2%, but this fell short of the estimate of 0.3%. Core CPI edged lower to 0.1%, shy of the forecast of 0.2%. Inflation levels will be an important factor for the Fed in its monetary policy projection, which remains at two more hikes in 2018. The odds of a rate hike at the June hike stands close to 100%, and the US dollar could continue to make broad gains as we get closer to the June policy meeting.

XAU/USD Fundamentals

Wednesday (May 16)

• 8:30 US Building Permits. Estimate 1.35M. Actual 1.35M
• 8:30 US FOMC Member Raphael Bostic Speaks
• 8:30 US Housing Starts. Estimate 1.32M. Actual 1.29M
• 9:15 US Capacity Utilization Rate. Estimate 78.4%. Actual 78.0%
• 9:15 US Industrial Production. Estimate 0.6%. Actual 0.7%
• 10:00 US Mortgage Delinquencies. Actual 4.63%
• 10:30 US Crude Oil Inventories. Estimate -1.1M. Actual -1.4M

Thursday (May 17)

• 8:30 US Philly Fed Manufacturing Index. Estimate 21.1
• 8:30 US Unemployment Claims. Estimate 219K

*All release times are DST

*Key events are in bold

XAU/USD for Wednesday, May 16, 2018

XAU/USD May 16 at 12:25 DST

Open: 1290.98 High: 1297.02 Low: 1286.44 Close: 1290.64

XAU/USD Technical

•  XAU/USD edged higher in the Asian session. The pair reversed directions and lost ground in European trade. XAU/USD has recovered and posted gains in the North American sessions
• 1285 is providing support
• 1307 is the next resistance line
• Current range: 1285 to 1307

Further levels in both directions:

• Below: 1285, 1260 and 1236
• Above: 1307, 1337, 1375 and 1416

OANDA’s Open Positions Ratio

In the Wednesday session, XAU/USD ratio is showing long positions with a strong majority (73%). This is indicative of trader bias towards GBP/USD breaking out and moving lower.

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.