XAU/USD – Gold Starts Week with Gains

Gold has posted considerable gains on Monday, erasing the losses which marked the Friday session. In North American trade, the spot price for one ounce is $1182.58. It’s a quiet start for releases, with no US major indicators on the schedule. On Tuesday, the US releases JOLTS Job Openings, with the indicator expected to improve to 5.59 million.

Is gold on its way up in early 2017? Since Christmas, the base metal has gained 4.2 percent against the US dollar. The incoming Trump administration is certain to shake things up in Washington, but it’s still unclear what economic policies Trump will implement. If the US economy continues to expand, the Fed might have to step in with further interest rates, which would likely hurt weaken gold prices. At the same time, the uncertainty surrounding Trump could lessen investor appetite and boost gold. With Trump taking over the presidency on January 20, things promise to get interesting sooner rather than later.

The Federal Reserve was in the spotlight last week, with the release of the minutes of its December meeting. The minutes were cautious in tone, with Fed policymakers essentially saying that monetary policy in the coming months will be dictated in large part by the economic platform of the incoming Trump administration, which remains unclear. FOMC members expressed concern about higher inflation levels, given the “prospects for more expansionary fiscal policies in the coming years”. This is a clear reference to president-elect Trump’s plans to increase fiscal spending and cut taxes, which would likely result in higher inflation, something the US hasn’t had to deal with in years. Still, policymakers haven’t changed their view that gradual rate hikes remains an appropriate monetary policy. Many analysts are predicting another rate hike in June, but this forecast could easily change, depending on the performance of the US economy in the first half of 2017.

XAU/USD Fundamentals

Monday (January 9)

• 10:00 US Labor Market Conditions Index. Actual -0.3
• 15:00 US Consumer Credit. Estimate 18.3B

Tuesday (January 10)

• 10:00 US JOLTS Job Openings. Estimate 5.59M

*All release times are EST

* Key events are in bold

XAU/USD for Monday, January 9, 2017

XAU/USD January 9 at 12:40 EST

Open: 1165.78 High: 1185.09 Low: 1165.75 Close: 1182.70

XAU/USD Technical

• XAU/USD posted gains in the Asian session. The pair lost ground in European trade but has reversed directions and moved higher in North American session
• 1174 has switched to a support role following gains strong gains by XAU/USD in the Thursday session
•  1199 is the next line of resistance
• Current range: 1174 to 1199

Further levels in both directions:

• Below: 1174, 1146, 1130, and 1111
• Above: 1199 and 1232 and 1260

OANDA’s Open Positions Ratio

In the Monday session, XAU/USD ratio is showing long positions with a strong majority (80%). This is indicative of trader bias towards XAU/USD continuing to climb to higher levels.

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