Gold Struggling at $1070

Gold is showing limited movement on Monday, as the metal trades at a spot price of $1068.12 at the start of the North American session. In the US, it’s a quiet start to the week, with the release of Manufacturing PMI and Housing Starts. On Tuesday, there are two key events out of the US – Preliminary GDP and CB Consumer Confidence.

Last week’s Fed minutes did not confirm a December rate hike, but most analysts feel that the long-awaited move will indeed occur next month. Market expectations have risen to 66% that the Fed will make a move next month, and recent comments by Fed policymakers have hinted that a rate move is a strong possibility. At the past two policy meetings, the vote against a rate hike was 9-1, but that clearly will not be the outcome at the December meeting. With the US economy showing improvement and employment and consumer indicators pointing upwards, the markets appear prepared for a small hike of 0.25% or 0.50%, and there is a growing view that a modest move would not cause unwanted turbulence on the global markets. One remaining question mark in the rate move puzzle is that of inflation levels. Recent inflation readings have been weak, and the Fed has repeatedly stated that inflation is a key consideration in any decision to raise rates. The markets will get a look at key inflation indicators shortly before the critical Fed policy meeting on December 16.

The economic slowdown in China and other emerging countries continues to affect markets worldwide, and one of the damaging results has been a sharp decline in commodity prices, including base metals such as gold. Somewhat surprisingly, gold has not been able to capitalize on its traditional reputation as a safe-haven in times of trouble, despite the attacks in Paris and terror alerts in France and other European countries. The precious metal has plunged since mid-October, losing some 9 percent of its value. There are a host of key releases this week, led by Preliminary GDP, so we could see some volatility from XAU/USD.

XAU/USD Fundamentals

Monday (Nov. 23)

• 14:45 US Flash Manufacturing PMI. Estimate 54.0 points
• 15:00 US Existing Home Sales. Estimate 5.39M

Upcoming Key Events

Tuesday (Nov. 24)

• 13:30 US Preliminary GDP. Estimate 2.0%
• 15:00 US CB Consumer Confidence. Estimate 99.3 points

*Key releases are highlighted in bold

*All release times are GMT

XAU/USD for Monday, November 23, 2015

XAU/USD November 23 at 13:40 GMT

XAU/USD 1068 H: 1076 L: 1067

XAU/USD Technical

• XAU/USD posted losses in the Asian session and has been flat in the European session.
• 1080 is an immediate resistance line.
• 1043 remains a strong support level.
• Current range: 1043 to 1080

Further levels in both directions:

• Below: 1043, 1024 and 980
• Above: 1080, 1098, 1134 and 1151

OANDA’s Open Positions Ratio

XAU/USD ratio is showing little movement. Long positions continue to make up a strong majority (75%), indicative of strong trader bias towards gold prices reversing directions and moving to higher levels.

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.