XAU/USD – Gold Steady as US Posts Mixed Numbers

Gold has edged higher on Tuesday, as the metal trades at $1342.26 in the North American session. On the release front, the Richmond Manufacturing Index came in minus -11, well short of expectations. US New Homes Sales sparkled with a gain of 654 thousand, well above the forecast of 575 thousand. On Wednesday, the US will publish additional housing data, with the release of Existing Home Sales.

US numbers were a mixed bag on Tuesday. The Richmond Manufacturing Index dropped sharply, dropping 11 points. The markets had expected a strong gain of plus -6. There was much better news from the housing sector, as New Home Sales jumped to 654 thousand, marking a 12.4  percent increase. This was the highest number of new home sales since 2008, pointing to strong consumer demand. Will Existing Home Sales follow suit with a strong release? The indicator came in at 5.57 million in June, and the estimate stands at 5.55 million.

Ahead of the Jackson Hole meeting, investors are sticking to the safety of the sidelines, unwilling to make any major moves. This has resulted in a lack of movement in the currency and gold markets so far this week. The conference, which begins on Thursday, will bring together the heads of central banks and other senior financial officials. The markets will be looking for hints from Federal Reserve chair Janet Yellen regarding the Fed’s monetary plans, particularly the timing a rate hike. FOMC members are expected to express their views in the days leading to the crucial meeting. Fed Vice Chairman Stanley Fischer took the opportunity and sounded upbeat about the US economy, saying that the Fed was close to its aims of a full labor market and the inflation target of 2 percent. The latter claim sounds a bit optimistic, as US inflation levels have consistently been closer to zero than the 2 percent level. Janet Yellen will likely address the inflation issue at Jackson Hole, as inflation levels will be a crucial factor in whether the Fed pulls the rate trigger before 2017. The odds of a September hike are only about 12%, while the likelihood of a December move is around 40%.

XAU/USD Fundamentals

Tuesday (August 23)

• 9:45 US Flash Manufacturing PMI. Estimate 53.1. Actual 52.1
• 9:59 US Richmond Manufacturing Index. Estimate +6 points. Actual -11 points
• 10:00 US New Home Sales. Estimate 575K. Actual 654K

Wednesday (August 24)

• 14:00 US Existing Home Sales. Estimate 5.55M

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Tuesday, August 23, 2016

XAU/USD August 23 at 13:40 EDT

Open: 1337.69 High: 1344.77 Low: 1334.82 Close: 1342.26

XAU/USD Technical

• XAU/USD was flat in the Asian session. The pair posted gains late in the European session and has been choppy in North American trade
• There is resistance at 1361
• 1331 is providing support
• Current range: 1331 to 1361

Further levels in both directions:

• Below: 1331, 1307 and 1279
• Above: 1361, 1388, 1416 and 1447

OANDA’s Open Positions Ratio

XAU/USD ratio is showing long positions with a strong majority (65%), indicative of trader bias towards XAU/USD moving upwards. 

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.