Gold Unsteady as Investors Await FOMC Minutes

Gold continues to hug the $1290 line in Wednesday session, where it has hovered for much of the week. Earlier in the day, gold moved close to $1300 but has since retracted. In North American trade, the spot price for one ounce of gold is $1291.20, down 0.01% on the day. New Home Sales dropped to 662 thousand, well off the estimate of 680 thousand. Later in the day, the Federal Reserve releases the minutes from the May policy meeting. On Thursday, the US will publish unemployment claims and Existing Home Sales.

The Federal Reserve will be in the spotlight on Wednesday, as analysts pore over the minutes of the May policy meeting. The Fed did not raise rates at the meeting, but a strong US economy has raised expectations that the Fed will press the rate trigger in June – according to the CME Group, the odds of a June hike stand at 100%. The markets will be looking for some guidance from the May minutes, and if the message from Fed policymakers is hawkish, traders can expect the US dollar to post gains. On Monday, Atlanta Fed President Raphael Bostic sounded positive about the economy, saying the Fed’s employment and inflation goals were close to being met. The Fed expects growth to be around 2.5% in 2018, and inflation has been moving closer to the Fed target of 2.0%.

Earlier this week, there seemed to be some positive momentum regarding the US-China trade talks. However, President Trump voiced skepticism over progress in the negotiations, saying he was ‘not really’ satisfied with the results. Trump’s comments have confused the markets, as Treasury Secretary Steven Mnuchin declared on the weekend that the trade spat was ‘on hold’. The remarks spooked Asian and European stock markets on Wednesday. Investor risk appetite has also waned as there is uncertainty whether North Korean leader Kim Jong-un will meet with President Trump next month. On Tuesday, Trump acknowledged that there was a ‘substantial’ chance that the summit planned with Kim in Singapore on June 12 would not take place. Gold has been unable to take advantage of the nervousness in the markets, as it was unable to consolidate a move towards $1300 on Wednesday, and has fallen back to around $1290.

XAU/USD Fundamentals

Wednesday (May 23)

• 9:45 US Flash Manufacturing PMI. Estimate 56.6. Actual 56.6
• 9:45 US Flash Services PMI. Estimate 54.9. Actual 55.7
• 10:00 US New Home Sales. Estimate 680K. Actual 662K
• 10:30 US Crude Oil Inventories. Estimate -2.5M. Actual
• 14:00 US FOMC Meeting Minutes

Thursday (May 24)

• 8:30 US Unemployment Claims. Estimate 220K
• 10:00 US Existing Home Sales. Estimate 5.56M

*All release times are DST

*Key events are in bold

XAU/USD for Wednesday, May 23, 2018

XAU/USD May 23 at 11:00 DST

Open: 1291.41 High: 1298.41 Low: 1288.02 Close: 1291.20

XAU/USD Technical

XAU/USD showed little movement in the Asian session. The pair posted gains in European trade but has retracted in the North American session

• 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

XAU/USD ratio is almost unchanged in the Wednesday session. Currently, long positions have a majority (69%), indicative of trader bias towards XAU/USD breaking out and moving 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.