Gold is showing little movement on Monday, as XAU/USD trades slightly below the $1200 level. In the European session, the spot price stands at $1195.94. It could be a quiet week for gold ahead of the Christmas holiday. On the release front, today’s sole event is US Existing Home Sales. The markets are expecting the indicator to soften in November, with an estimate of 5.21 million.
In the US, employment numbers continued to impress last week, as unemployment claims dropped to 289 thousand, the lowest level in six weeks. The easily beat the estimate of 297 thousand. The news was not as good on the manufacturing front, as the Philly Fed Manufacturing Index slid to 24.5 points, down from 40.6 points in November. The November reading was unusually high, and the markets had expected a sharp downturn, with the estimate standing at 26.3 points.
Previous Fed policy statements have usually stated that the Fed would maintain low rates for a “considerable time”, but the December statement changed terminology, saying the Fed would be “patient” before raising rates. In a follow-press conference, Federal Reserve chair Janet Yellen was less ambiguous, saying that the Fed was unlikely to raise rates for the “next couple of meetings”. The markets took this to mean that a rate hike is in the works, but not before April. Gold prices remained steady after the Fed statement, but as an interest rate hike by mid-2015 seems likely, there is room for the dollar to make gains against gold.
XAU/USD for Monday, December 22, 2014XAU/USD December 22 at 11:25 GMT
XAU/USD 1195.94 H: 1203.36 L: 1194.80
XAU/USD has shown little movement in the Asian and European sessions, as the pair trades slightly below the key 1200 line.
1200 remains a weak resistance line. 1215 is next.
1175 is an immediate support level.
Current range: 1175 to 1200
Further levels in both directions:
Below: 1175, 1156, 1130 and 1111
Above: 1200, 1215, 1240, 1255 and 1275
OANDA’s Open Positions Ratio
XAU/USD ratio is pointing to gains in long positions on Monday. This is not consistent with the lack of movement we are seeing from the pair. The ratio has a majority of long positions, indicative of trader bias towards gold breaking out of range and moving to higher ground.
15:00 US Existing Home Sales. Estimate 5.21M.
* Key releases are highlighted in bold
*All release times are GMT
About Kenny Fisher
Currency Analyst, Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years. Follow on and on his Google+ profile.