Gold has posted slight gains on Wednesday, continuing the upward trend which has marked the past two daily sessions. Gold is trading at a spot price of $1248.13 an ounce in the North American session. On the release front, Pending Home Sales looked sharp, easily beating expectations with a gain of 1.4%. Today’s highlight is Federal Reserve’s monthly policy statement. The markets are not expecting any change to the current benchmark interest rate of 0.25%, but will be combing through the Fed’s statement. On Thursday, the US releases two key events – Advance GDP and Unemployment Claims.
Gold has looked sharp in the first quarter of 2016, posting gains of some 17 percent. This marked the base metal’s strongest quarter in 30 years, a reflection of turmoil in the global economy, which has seen a sharp slowdown in China and the continued collapse of oil prices. Traditionally, gold is a safe-haven asset in times of crisis, and has climbed sharply in recent months as investors with a reduced appetite for risk have snapped up the commodity. With the Fed widely expected to maintain interest rates at the current level of 0.25%, the markets will be carefully monitoring the tone of the policy statement and looking for clues about a possible rate hike in June. Janet Yellen has sounded cautious about the health of the US economy, and if the Fed continues on this path and sends out a dovish message, gold could post further gains at the expense of the dollar.
The US economy continues to expand, but there are some weak spots, including the manufacturing sector. Core Durable Goods dropped 0.2%, well off the estimate of a 0.6% gain. This marked the fourth decline in five months. Durable Goods Orders was stronger at 0.8%, but also missed expectations, as the estimate stood at 1.9%. Recent manufacturing reports, such as the Philly Fed Mfg. Index, have also been soft, as the industry has been hard-hit by weak global demand and a downturn in the US oil industry due to low crude prices.
XAU/USD Fundamentals
Wednesday (April 27)
- 8:30 US Goods Trade Balance. Estimate -62.5B. Actual -56.9B
- 10:00 US Pending Home Sales. Estimate 0.3%. Actual 1.4%
- 10:30 US Crude Oil Inventories. Estimate 1.4M. Actual 2.0M
- 14:00 US FOMC Statement
- 14:00 US Federal Funds Rate. Estimate <0.50%
Thursday (April 28)
- 8:30 US Advance GDP. Estimate 0.7%.
- 8:30 US Unemployment Claims. Estimate 258K
*Key releases are highlighted in bold
*All release times are EDT
XAU/USD for Wednesday, April 27, 2016
XAU/USD April 27 at 12:40 EDT
Open: 1242.75 Low: 1242.50 High: 1251.07 Close: 1248.13
XAU/USD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1191 | 1205 | 1232 | 1255 | 1279 | 1303 |
- There is resistance at 1255
- 1232 is providing support.
- Current range: 1232 to 1255
Further levels in both directions:
- Below: 1232, 1205, 1191 and 1165
- Above: 1255, 1279 and 1303
OANDA’s Open Positions Ratio
XAU/USD ratio shows long positions with a strong majority (61%). This is indicative of trader bias towards XAU/USD continuing to move higher.
