XAU/USD – Gold Dips to 1-Week Lows ahead of Yellen, Host of FOMC Speakers

Gold is lower on Wednesday, following strong losses in the Tuesday session. In the North American session, the metal is trading at a spot price of $1327.38 per ounce. On the release front, Durable Goods Orders came in at a flat 0.0%, above the forecast of -1.0%. Core Durable Goods Orders declined 0.4%, edging above the estimate of a 0.5% decline. Federal Reserve chair Janet Yellen will testify before the House Committee on Financial Services and several FOMC members have public engagements. On Thursday, the US will release Final GDP and unemployment claims.

Federal Reserve chair Janet Yellen will testify before a Congressional committee on Thursday, and her remarks could shed more light on the Fed’s pans regarding a rate hike. Last week, the Fed held interest rates at 0.25%. The Fed policy statement was generally upbeat and broadly hinted at a December rate hike. However, the markets can be forgiven for remaining somewhat skeptical, as the Fed has previously talked about a strong US economy and failed to follow up with a rate hike. Currently, a rate hike is priced in at 44 percent, but plenty can happen until the December policy meeting (the Fed is unlikely to make a move in November, just ahead of the US presidential election). The Fed has consistently stated that the next rate hike will be data-dependent, which means that stronger economic numbers, especially on the inflation front, will increase the likelihood of a December hike.

The markets will also be paying close attention as a host of FOMC members make public appearances on Wednesday, including James Bullard, Charles Evens, Loretta Mester and  Esther George. Mester and George both dissented in last week’s Fed decision to hold rates, voting instead to raise rates immediately. Today’s appearances by the FOMC members could provide insight into how divided the Fed is concerning the path of future rate hikes. As gold prices are sensitive to interest rate moves, any change in market sentiment concerning monetary policy could affect gold prices.

XAU/USD Fundamentals

Wednesday (September 28)

• 8:30 US Core Durable Goods Orders. Estimate -0.5%. Actual -0.4%
• 8:30 US Durable Goods Orders. Estimate -1.0%. Actual 0.0%
• 10:00 US Fed Chair Janet Yellen Testifies
• 10:10 US FOMC Member James Bullard Speaks
• 10:30 US Crude Oil Inventories. Estimate 2.4M. Actual -1.9M
• 19:15 US FOMC Member Esther George Speaks

Thursday (September 29)

• 8:30 US Final GDP. Estimate 1.3%
• 8:30 US Unemployment Claims. Estimate 260K
• 16:00 US Federal Reserve Chair Janet Yellen Speaks

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Wednesday, September 28, 2016

XAU/USD September 28 at 12:00 EDT

Open: 1326.48 High: 1327.15 Low: 1317.94 Close: 1320.86

XAU/USD Technical

• XAU/USD showed limited movement in the Asian and European sessions. The pair has posted considerable losses in North American trade
• 1307 is providing support
• 1331 is a weak resistance line
• Current range: 1307 to 1331

Further levels in both directions:

• Below: 307, 1279 and 1245
• Above: 1331, 1361, 1388 and 1416

OANDA’s Open Positions Ratio

XAU/USD ratio has shown movement towards long positions. Currently, long positions have a substantial majority (67%). This is indicative of trader bias towards XAU/USD reversing directions and 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.