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Gold Hugging $1300, Investors Await Fed Hike

Gold has posted slight losses in the Tuesday session. In North American trade, the spot price for one ounce of gold is $1297.56, down 0.20% on the day. On the release front, consumer inflation numbers were within expectations. CPI remained pegged at 0.2% and Core CPI edged up to 0.2%, just above the forecast of 0.1%. On Wednesday, the US will release PPI reports and the Federal Reserve is expected to raise interest rates to a range between 1.75% and 2.00%.

History was made in Singapore on Tuesday, as leaders of the U.S and North Korea met for the first time ever. The joint statement put out by leaders was short on details, which could explain the lack of movement from gold on Tuesday. Still, the fact that the two leaders held face-to-face talks and spoke glowingly about the future was a remarkable achievement. President Trump said that President Kim Jong-un had reaffirmed its full commitment to complete denuclearization of North Korea. Although the crucial issue of verification was not addressed, there’s no denying that tensions have significantly eased and that the summit could mark a first step in bringing peace to the Korean peninsula.

All eyes are on the Federal Reserve, which is expected to raise rates by a quarter-point at its policy meeting on Wednesday. The odds of a quarter-point move stand at 96% percent, according to the CME Group. Although a rate hike has been priced in by the markets, such a significant move could boost the dollar, and conversely, weigh on gold prices. Investors are still uncertain whether the Fed will raise rates three or four times in 2018. Fed policymakers seemed divided on this question, and if the rate statement provides any clues, we could see some strong movement in gold prices in the North American session.

 

XAU/USD Fundamentals

Tuesday (June 12)

  • 6:00 US NFIB Small Business Index. Estimate 105.2. Actual 107.8
  • 8:30 US CPI. Estimate 0.2%. Actual 0.2%
  • 8:30 US Core CPI. Estimate 0.1%. Actual 0.2%
  • 13:01 US 30-year Bond Auction
  • 14:00 US Federal Budget Balance. Estimate -119.0B

Wednesday (June 13)

  • 8:30 US PPI. Estimate 0.3%
  • 8:30 US Core PPI. Estimate 0.2%
  • 14:00 US FOMC Economic Projections
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <2.00%
  • 14:30 US FOMC Press Conference

*All release times are DST

*Key events are in bold

 

XAU/USD for Tuesday, June 12, 2018

XAU/USD June 12 at 12:15 DST

Open: 1300.18 High: 1300.76 Low: 1293.35 Close: 1297.56

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1236 1260 1285 1307 1337 1375

XAU/USD showed inched lower in the Asian session and was flat in European trade. The pair edged lower but then recovered. In North American trade, XAU/USD has posted small gains

  • 1285 is providing support
  • 1307 is the next resistance line
  • Current range: 1285 to 1307

Further levels in both directions:

  • Below: 1285, 1260 and 1236
  • Above: 1307, 1337, 1375 and 1416

OANDA’s Open Positions Ratio

XAU/USD ratio is showing limited movement in the Tuesday session. Currently, long positions have a majority (67%), indicative of trader bias towards XAU/USD reversing directions and moving to higher ground.

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.GBP

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