Gold Jumps to 14-Week High on Dovish Fed Minutes

Gold has posted considerable gains in the Thursday session. In North American trade, the spot price for one ounce is $1249.42. In economic news, unemployment claims rose to 244 thousand, slightly above the estimate of 242 thousand. On Friday, there are two key events – New Home Sales and UoM Consumer Sentiment.

The Federal Reserve minutes were somewhat dovish, as policymakers didn’t provide shed any light on the timing of another rate move. This lack of clarity disappointed the markets and has propelled gold upwards on Thursday. The metal broke above the $1250 level earlier in the day, its highest level since November 11. The key statement in the minutes was that a rate hike “fairly soon” could be appropriate in order to head off an overheated economy. The minutes indicated that Fed policymakers remain confident that the central bank will raise rates gradually, given the strong performance of the US economy. At the same time, the minutes noted uncertainty about President Trump’s fiscal stimulus plan but little concern over the risk of inflation. So when can we expect a rate hike? Although pressure is slowly building towards a move by the Fed, there does not appear a sense of urgency to raise rates at the next meeting in March. According to the CME Group, the odds of a March hike are only at 17%, while the likelihood of a hike in either May or June stands above 40%.

XAU/USD Fundamentals

Thursday (February 23)

• 7:00 US Treasury Secretary Steven Mnuchin Speaks
• 8:30 US Unemployment Claims. Estimate 242K. Actual 244K
• 9:00 US HPI. Estimate 0.4%. Actual 0.4%
• 10:30 US Natural Gas Storage. Estimate -86B. Actual -89B
• 11:00 US Crude Oil Inventories. Estimate 3.4M. Actual 0.6M 
• 13:00 US FOMC Member Robert Kaplan Speech

Upcoming Key Events

Friday (February 24)

• 10:00 US New Home Sales. Estimate 575K
• 10:00 US Revised UoM Consumer Sentiment. Estimate 96.1

*All release times are GMT

*Key events are in bold

XAU/USD for Thursday, February 23, 2017

XAU/USD February 23 at 13:00 EST

Open: 1236.75 High: 1251.10 Low: 1235.74 Close: 1249.42

XAU/USD Technical

• XAU/USD was flat in the Asian session. The pair posted gains in the European session and continues to move upwards in North American trade
• 1232 has some breathing room in support following strong gains from XAU/USD
• 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

XAU/USD ratio remains unchanged this week. Currently, long positions have a majority (63%), indicative of trader bias towards XAU/USD continuing its rally.

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