XAU/USD – Gold Moves Higher Ahead of CPI

Gold prices have moved higher to start the week. In Monday’s North American trade, the spot price for an ounce of gold is $1324.83, up 0.63% on the day. It’s a quiet start to the week, with only one event. The US federal budget is expected to rebound and show a large surplus of $50.2 billion. The last time the federal government posted a surplus was in September.

Gold lost ground 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, since much of the sell-off is related to investor concerns over possible interest rate hikes by major central banks. The Bank of England has said it could accelerate its pace of hikes, and the Federal Reserve could follow suit if inflation moves higher. Gold prices are closely linked to interest rate moves, and a change in the Fed’s projection of interest rate moves could have a sharp effect on gold. Currently, the Fed is projecting three rate hikes this year, but if inflation moves higher and the robust US economy continues its current expansion, the Fed may opt for four or even five rate hikes, and this would push gold to lower levels.

It’s a quiet start to the week in the US, and the US dollar has been generally subdued. That will likely change on Wednesday, with the release of inflation and retail sales reports. The markets will be glued to the inflation indicators, as last week’s stock market slide was triggered by concern that higher inflation would lead to additional rate hikes from the Federal Reserve and other central banks. If inflation numbers are higher than expected, we could see some volatility in gold prices and further sell-offs in the stock markets.

XAU/USD Fundamentals

Monday (February 12)

• 14:00 US Federal Budget Balance. Estimate 50.2B

*All release times are EST

*Key events are in bold

XAU/USD for Monday, February 12, 2018

XAU/USD February 12 at 12:20 EST

Open: 1314.73 High: 1326.24 Low: 1314.08 Close: 1324.83

XAU/USD Technical

• XAU/USD posted gains in the Asian session but gave up most of these gains in European trade. The pair has posted gains 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

In the Monday session, XAU/USD ratio is showing short positions with a majority (54%). This is indicative of trader bias towards XAU/USD reversing directions 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.