Gold Lower as Fed Talks Positive About US Economy

Gold prices continue to weaken on Thursday, following the Federal Reserve policy statement. In the European session, the metal is trading at a spot price of $1269.87. Gold has dipped 1.7% since early on Wednesday and is trading at a two-week low. On the release front, today’s key events include Unemployment Claims and Pending Home Sales.

On Wednesday, the Federal Reserve reiterated that it would be “patient” regarding the timeline for a raise in interest rates, which have been close to zero since 2008. However, the Fed also noted that the US economy was expanding at a “solid pace” and this vote of confidence has boosted the dollar and pushed down gold prices. The markets expect the Fed to raise rates sometime during the year, so the “Fed rate watch” is sure to continue, as the markets look for clues as to when the Fed will make a move.

Earlier in the week, US durable good reports disappointed, as Durable Goods Orders plunged 3.4%, marking a 4-month low. There was no relief from Core Durable Goods Orders, which declined by 0.8%, its fifth drop in six readings. The markets had expected gains from both indicators. There was much better news later in the day, as CB Consumer Confidence jumped to 102.9 points, crushing the estimate of 95.3 points. New Home Sales followed suit, rising to 481 thousand, well above the forecast of 452 thousand.

XAU/USD for Thursday, January 29, 2015

XAU/USD January 29 at 12:10 GMT

XAU/USD 1269.87 H: 1285.86 L: 1263.76

XAU/USD Technical

• XAU/USD showed limited movement in the Asian session. The pair has lost ground in European trade, breaking below support at 1275.
• 1275 has reverted to a resistance role as gold trades at lower levels. 1300 is stronger.
• 1255 is an immediate support line.
• Current range: 1255 to 1275

Further levels in both directions:

• Below: 1255, 1240, 1215 and 1200
• Above: 1275, 1300, 1322, 1345 and 1375

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in long positions on Thursday, reversing the direction seen a day earlier. This is not consistent with the pair’s movement, as gold continues to lose ground. The ratio has a majority of long positions, indicating trader bias towards gold reversing direction and moving to higher ground.

XAU/USD Fundamentals

• 13:30 US Unemployment Claims. Estimate 301K.
• 15:00 US Pending Home Sales. Estimate 0.6%.
• 15:30 US Natural Gas Storage. Estimate -113B.

*Key releases are highlighted in bold

*All release times are GMT

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