Gold Slips as GDP Sparkles

Gold has posted considerable losses in the Wednesday session. In North American trade, the spot price for an ounce of gold is $1284.05, down 0.72% on the day. In the US, Preliminary GDP for the third quarter came in at 3.3%, matching the forecast. Pending Home Sales jumped to 3.5%, crushing the estimate of 1.1%. As well, Fed Chair Janet Yellen testifies before a congressional committee. On Thursday, the US releases Personal Spending and unemployment claims.

There was more good news for the US economy on Wednesday. Preliminary GDP for the third quarter posted a sharp 3.3%, as expected. This was higher than the initial estimate of 3.0% and marked the fastest growth rate since Q3 of 2014. This was particularly impressive, as the southern US was battered by major hurricanes. Although consumer consumption was softened in the third quarter, business spending improved. The rosy picture of the US economy was summarized by Fed Chair Yellen on Wednesday, who said  that the expansion was broad-based, across sectors of the economy.

Fed Chair Designate Jerome Powell testified before the Senate Banking Committee on Tuesday. Powell said that he favored tailoring regulations for small banks, leaving the toughest regulations for the big players. Powell was cautious and diplomatic during the hearing, saying that the case is building for a December rate hike, and refused to express an opinion on the Trump tax bill. He will replace Janet Yellen in February, and is widely expected to continue Yellen’s monetary stance of small, gradual rate hikes. Fed policymakers have differing views on what to do about inflation, which remains at low levels. Some members have proposed that the Fed drop its 2 percent target, in favor of a “gradually rising path” for prices. The Fed remains confounded by low inflation and wage growth, despite a labor market that is at full capacity. Still, the Fed will likely pull the rate trigger next month, and could raise rates up to 3 more times in 2018 if the economy continues to expand at its current pace.

XAU/USD Fundamentals

Wednesday (November 29)

• 8:30 US Preliminary GDP. Estimate 3.3%. Actual 3.3%
• 8:30 US FOMC Member Charles Dudley Speaks
• 8:30 US Preliminary GDP Price Index. Estimate 2.2%. Actual 2.1%
• 10:00 US Fed Chair Janet Yellen Testifies
• 10:00 US Pending Home Sales. Estimate 1.1%. Actual 3.5%
• 10:30 US Crude Oil Inventories. Estimate -2.5M. Actual -3.4M
• 14:00 US Beige Book
• All Day – OPEC Meetings

Thursday (November 30)

• 8:30 US Unemployment Claims. Estimate 241K
• 8:30 US Personal Spending. Estimate 0.2%

*All release times are GMT

*Key events are in bold

XAU/USD for Wednesday, November 29, 2017

XAU/USD November 29 at 12:20 EST

Open: 1293.57 High: 1296.76 Low: 1282.76 Close: 1284.05

XAU/USD Technical

• XAU/USD ticked higher in the Asian session but retracted in European trade. The pair has posted considerable losses in North American trade
• 1260 is providing support
• 1285 was tested earlier in resistance and remains a weak line
• Current range: 1260 to 1285

Further levels in both directions:

• Below: 1260, 1240 and 1213
• Above: 1285, 1307, 1337 and 1367

OANDA’s Open Positions Ratio

XAU/USD ratio is almost unchanged in the Wednesday session. Currently, long positions have a majority (64%), indicative of trader bias towards XAU/USD reversing directions 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.