Gold prices continue to head south in the Monday session. In North American trade, the spot price for one ounce of gold is $1203.75, down 0.50% on the day. On the release front, there are no major releases out of the U.S. on the schedule.
A hawkish Federal Reserve statement sent gold prices lower last week, and solid inflation and consumer confidence data on Friday continue to weigh on gold. On Monday, gold touched a low of $1202.61, marking a 4-week low. On Friday, the Producer Price Index (PPI) jumped 0.6%, its sharpest gain since January 2017. This easily beat the estimate of 0.2%. Core PPI was also sharp, with a gain of 0.5%, compared to a gain of 0.2%. Stronger inflation will reinforce expectations that the Fed will hike rates in December. Currently, the odds of a quarter-percent rate hike stands at 76%. On the consumer front, UoM consumer sentiment dropped to 98.3, down from 99.0 points. Still, this beat the forecast of 98.0 points.
The Fed shows no signs of easing up on interest rate hikes, with Fed policymakers stating that interest rates will continue to rise until the “neutral rate” of between 2.5 percent and 3.5 percent is reached. This means we can expect rate hikes once a quarter in 2019, barring a sharp downturn in the economy. The policy of gradual increases is good news for the U.S dollar, and conversely bearish for gold prices, as higher interest rates means that the greenback is more attractive to investors.
Monday (November 12)
- Tentative – US Loan Officer Survey
- 14:30 US FOMC Member Mary Daly Speaks
*All release times are EST
*Key events are in bold
XAU/USD for Monday, November 12, 2018
XAU/USD November 12 at 12:15 DST
Open: 1209.78 High: 1211.60 Low: 1202.61 Close: 1203.75
XAU/USD showed little movement in the Asian session. The pair has headed lower in the European session and this has continued in North American trade
- 1170 is providing support
- 1204 is fluid. It is a weak resistance line.
- Current range: 1170 to 1204
Further levels in both directions:
- Below: 1170, 1146 and 1122
- Above: 1204, 1220, 1236 and 1261