Gold has posted slight losses on Wednesday, as the spot price stands at $122.55 per ounce in the European session. After strong gains last week, gold prices have weakened slightly. On the release front, we’ll get a look at US releases after a quiet start to the week. There are three key events on the calendar – Retail Sales, Core Retail Sales and PPI.
US markets were off on Monday for a holiday, so it’s been a quiet week until now for XAU/USD. That could change later on Wednesday, as the US releases key consumer spending and inflation data. The markets are keeping low expectations, so traders should be prepared for some movement from the pair if there are some unexpected readings from Wednesday’s releases.
The US dollar has looked razor sharp against gold, as the metal has lost about 5% of its value since the start of September. However, the greenback’s rally was interrupted by last week’s FOMC minutes, which were unexpectedly dovish. In the minutes, the Fed poured some cold water on rising expectations of a rate hike, as a number of policymakers said that the Federal Reserve should take a more data-dependent approach regarding a rate hike. The Fed also voiced concern about the rising strength of the US dollar which could weigh on the recovery. On the weekend, FOMC member Stanley Fischer said that the Fed could slow tightening if global growth is weaker than expected. Strong US numbers have raised expectations about a rate hike, but clearly the Fed is taking a cautious approach regarding the timing of a rate hike. Still, with QE set to wind up by the end of the month, rising speculation about higher rates bodes well for the US dollar.
XAU/USD 1222.55 H: 1230.22 L: 1222.08
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