XAU/USD – Gold Hits $1240, Retracts Ahead of FOMC Minutes

Gold is showing some movement in the Wednesday session but remains unchanged. In North American trade, the spot price for one ounce is $1232.04. In economic news, Existing Housing Sales jumped to 5.69 million, easily beating the estimate of 5.55 million. Later in the day, the Federal Reserve will publish the minutes of the January policy meeting. On Thursday, the US releases unemployment claims, with an estimate of 242 thousand.

All eyes are on the Federal Reserve on Wednesday, ahead of the release of the Fed minutes from the most recent policy meeting. The markets will be looking for some guidance from the minutes regarding the Fed’s view of the economy and future interest rate policy. The central bank finally pressed the rate trigger in December, a full year after the previous rate hike. Last week, Fed Chair Janet Yellen strongly hinted that that another hike is on the way, leaving the markets to speculate on the timing of a hike – will it be in March or June? Even though the US economy is solid and we could see several rate hikes in 2017, market uneasiness over the Trump administration continues to grow, dampening investor appetite for risk. Trump continues to have difficulty filling in key cabinet positions and the media continues to probe connections between Trump officials and Russia. Trump is yet to outline a clear and coherent economic policy, although he has promised to unveil a tax package in the next few weeks. After Trump’s shock win in November, post-election euphoria boosted the markets. However, Trump’s first month in office has been marked by controversy and confusion, which has unsettled the markets.

XAU/USD Fundamentals

Wednesday (February 22)

• 10:00 US Existing Home Sales. Estimate 5.55M. Actual 5.59M
• 13:00 US FOMC Member Jerome Powell Speech
• 14:00 US FOMC Meeting Minutes

Thursday (February 23)

• 8:30 US Unemployment Claims. Estimate 242K
• 11:00 US Crude Oil Inventories

*All release times are GMT

*Key events are in bold

XAU/USD for Wednesday, February 22, 2017

XAU/USD February 22 at 12:00 EST

Open: 1234.67 High: 1240.64 Low: 1230.67 Close: 1232.04

XAU/USD Technical

• XAU/USD showed limited movement in the Asian session. The pair posted gains in the European session but has given up these gains in North American trade
• 1232 is fluid. This line is currently weak support and could break during the North American session
• 1260 is the next resistance line
• Current range: 1232 to 1260

Further levels in both directions:

• Below: 1232, 1199, 1174 and 1146
• Above: 1260, 1285 and 1307

OANDA’s Open Positions Ratio

XAU/USD ratio remains unchanged this week. Currently, long positions have a majority (62%), indicative of trader bias towards XAU/USD reversing directions and moving to higher levels.

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