XAU/USD – Gold Ticks Higher, Advance GDP Looms

Gold has posted slight losses in the Wednesday session. In North American trade, the metal is trading at a spot price of $1268.86 per ounce. On the release front, Thursday’s indicators were positive. Core Durable Goods Orders improved in September with a gain of 0.2%, matching the forecast. Unemployment Claims edged down to 258 thousand, below the estimate of 261 thousand. As well, Pending Home Sales rebounded with a strong gain of 1.5%, above the estimate of 1.2%.

CB Consumer Confidence disappointed on Tuesday. The key indicator fell to 98.6 points in October, down from 104.1 points in the September report. This marked a 3-month low for the indicator. The disappointing reading could translate into lower consumer spending, which would likely put a crimp in the high-flying US dollar. Gold took advantage of the weak release and touched a high of $1274 on Tuesday, close to 3-week highs.

Market sentiment remains high that the Federal Reserve will press the rate trigger in December, with CME Fed Watch pricing in a hike at 72 percent. The prospect of a US rate hike for the first time in a year has bolstered the US dollar against its rivals. The US economy remains strong, buoyed by a labor market that is close to capacity, with unemployment hovering at just 5.0%. Inflation levels remain low and are unlikely to show much improvement in the next few months. Although the Fed would prefer stronger inflation, other economic indicators remain strong enough such that the lack of inflation is unlikely to be the critical factor in the Fed rate decision. The Fed will also hold a policy meeting in early November, but is unlikely to make any rate moves just before the US presidential election.

XAU/USD Fundamentals

Thursday (October 27)

• 8:30 US Core Durable Goods Orders. Estimate 0.2%. Actual 0.2%
• 8:30 US Unemployment Claims. Estimate 261K. Actual 258K
• 8:30 US Durable Goods Orders. Estimate 0.1%. Actual -0.1%. 
• 10:00 US Pending Home Sales. Estimate 1.2%. Actual 1.5%
• 10:30 US Natural Gas Storage. Estimate 71B. Actual 73B

Upcoming New Events

Friday (October 28)

• 8:30 US Advance GDP. Estimate 2.5%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 88.2

*All release times are EDT

*Key events are in bold

XAU/USD for Thursday, October 27, 2016

XAU/USD October 27 at 12:10 EDT

Open: 1266.54 High: 1272.83 Low: 1264.88 Close: 1268.86

XAU/USD Technical

• XAU/USD was flat in the Asian session. The pair has posted slight gains in the European session and has been choppy in North American trade
• 1245 is providing support
• There is resistance at 1279
• Current range: 1245 to 1279

Further levels in both directions:

• Below: 1245, 1223 and 1199
• Above: 1279, 1307 and 1331

OANDA’s Open Positions Ratio

XAU/USD ratio is almost unchanged in the Thursday session. Long positions command a substantial majority (74%), indicative of trader bias towards XAU/USD 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.