Gold Improves on Dismal Durable Goods Orders

Gold has posted considerable gains in the Wednesday session. In North American trading, the spot price for an ounce of gold is $1290.71, up 0.79% on the day. On the release front, durable goods reports were a mix. Core Durable Goods Orders gained 0.4%, matching the forecast. However, Durable Goods Orders declined 1.4%, well of the forecast of a 0.4% gain. The UoM Consumer Sentiment report came in at 98.5, above the forecast of 98.2 points. Later in the day, the Federal Reserve releases the minutes of its November policy meeting.

The markets are keeping an eye on the Federal Reserve, which will release the November minutes later in the day. In October, the Fed announced that it would taper its balance sheet, and monthly reductions of $10 billion commenced around the time of the November meeting. The likelihood of upcoming rate hikes remains very high, with the odds for December and January hikes priced in at 91% and 89%, respectively. If the minutes reinforce the market perception that additional rate hikes are just around the corner, the US dollar could gain ground.

As President Trump’s tax reform bill winds it way through Congress, gold prices have been fluctuating and traders can expect this to continue when the Senate votes on its version of the bill after Thanksgiving. On Monday, gold prices jumped 1.4%, erasing the losses seen on Friday. President Trump won a major legislative victory when the House of Representatives passed a tax reform bill. However, with the vote largely based on party lines, Republicans will have a tougher battle passing the Senate version of the bill, as the Republicans have a slim majority of 52-48. The tax legislation provides major tax relief and cut corporate taxes from 35% to 20%, and if Congress does enact a new tax code, the US dollar could make strong gains, at the expense of gold.

XAU/USD Fundamentals

Wednesday (November 22)

• 8:30 US Core Durable Goods Orders. Estimate 0.4%. Actual 0.4%
• 8:30 US Unemployment Claims. Estimate 241K. Actual 239K
• 8:30 US Durable Goods Orders. Estimate 0.4%. Actual -1.2%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 98.2. Actual 98.5
• 10:00 US Revised UoM Inflation Expectations. Actual 2.5%
• 10:30 US Crude Oil Inventories. Estimate -1.4M. Actual -1.9M
• 12:00 US Natural Gas Storage. Estimate -51B
• 14:00 US FOMC Meeting Minutes

*All release times are GMT

*Key events are in bold

XAU/USD for Wednesday, November 22, 2017

XAU/USD November 22 at 12:05 EST

Open: 1280.46 High: 1291.98 Low: 1279.11 Close: 1290.71

XAU/USD Technical

• XAU/USD inched higher in the Asian session. The pair has posted gains in European and North American sessions
• 1285 is a weak support line
• 1307 is the next resistance line
• Current range: 1285 to 1307

Further levels in both directions:

• Below: 1285, 1260, 1240 and 1213
• Above: 1307, 1337 and 1367

OANDA’s Open Positions Ratio

XAU/USD ratio is showing movement towards long positions. Currently, long positions have a majority (72%), indicative of trader bias towards XAU/USD continuing to move to higher ground.

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.