Strong Gold Pushes to 3-Week Highs

Gold has started the new trading week with gains. In Monday’s North American session, gold is trading at a spot price of $1258.12 an ounce. On the release front, it’s a very quiet start to the week. There are no US economic indicators on Monday, but the markets will have a few cues during the day. US Treasury Secretary Jack Lew will speak at an event in Washington. FOMC member William Dudley will deliver remarks at an event in New York, and the Federal Reserve will release a statement concerning the discount rates to be charged to Federal Reserve Banks.

Gold prices are at 3-week highs, as the base metal continues to gain ground against the dollar. Gold has been bolstered by recent Fed statements as well the Fed minutes, which were dovish and dampened any expectations of a rate hike in April. On Thursday, New York Federal Reserve president William Dudley stated that the Fed needed to approach future rate hikes with caution. Dudley reiterated Fed chair Yellen’s recent comments that although domestic growth was steady, the US economy remained prone to risks due to turbulent conditions in the global economy. The Fed minutes showed strong differences of opinion among policymakers, with some members in favor of an April hike. As well,there was a split amongst members as to whether the recent pickup in inflation was sustainable. Many Fed members were worried about the lack of options available to the Fed since rates remain close to zero. This concern can have significant impact on the currency markets, since the dollar could strengthen if the Fed is unable to implement effective easing measures. What’s next from the Fed? A rate hike in April is highly unlikely, and a move in June will depend on economic data, in particular employment and inflation numbers.

XAU/USD Fundamentals

Monday (April 11)

• 8:30 US Treasury Secretary Jack Lew Speaks
• 9:25 US FOMC Member William Dudley Speaks
• Tentative – Federal Reserve Announcement

*Key releases are highlighted in bold

*All release times are DST

XAU/USD for Monday, April 11, 2016

XAU/USD April 11 at 12:50 DST

Open: 1244.72 Low: 1243.98 High: 1258.81 Close: 1258.12

XAU/USD Technical

• XAU/USD posted gains in the Asian session. The pair leveled off in the European session but has resumed upward movement in North American trade
• There is resistance at 1279
• 1255 has switched to a support role following strong gains by XAU/USD on Monday
• Current range: 1255 to 1279

Further levels in both directions:

• Below: 1255, 1232, 1205 and 1191
• Above: 1279, 1303 and 1331

OANDA’s Open Positions Ratio

XAU/USD ratio is showing long positions with a strong majority (59%). This is indicative of trader bias towards gold continuing to move higher.

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.