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Currencies Gold Gold Steadies After Sharp Losses, Markets Await Yellen Testimony


Gold prices have steadied on Tuesday, as the spot price stands at $1309.23 per ounce late in the European session. Gold slipped about 2% on Monday, as the pair fell close to the $1300 level. On the release front, Monday’s highlights are Core Retail Sales and Retail Sales. As well, Federal Reserve chair Janet Yellen will begin two days of testimony on Capitol Hill.

Janet Yellen visits Capitol Hill this week, starting with testimony on Tuesday before the Senate Banking Committee. The Federal Reserve minutes, released last week, did not shed much light on when the Fed plans to raise interest rates, but policymakers did agree to wind up the QE scheme by October. The asset purchase program flooded the economy with over $2 trillion, and the Fed has been steadily reducing the program since last December. Winding down QE, which currently stands at $45 billion/month, will require several more tapers by the Fed, but that shouldn’t pose a problem, as the US economy continues to improve. The markets will be closely following Yellen’s remarks, looking for clues regarding the timing of a rate hike.

The ECB had hoped that its rate cutting in June would  inject some life into growth and inflation levels. So far, the results have been less than impressive, as inflation and manufacturing numbers in Germany and France, the two largest economies in the Eurozone, remain at very low levels. A strong euro has not helped matters, as it makes European exports more expensive and weighs on growth. If the trend of weak figures continues, the ECB will face more pressure to take action at its next policy meeting.

XAU/USD for Tuesday, July 15, 2014 160714aXAU/USD July 15 at 11:50 GMT
XAU/USD 1309.23 H: 1338.93 L: 1303.28

XAU/USD Technical


XAU/USD showed little movement in the Asian session and this has continue in the European session.
1315 has reverted to a resistance role and is a weak line. 1331 is stronger.
1300 is providing support. 1275 is next.
Current range: 1300 to 1315.

Further levels in both directions:
Below: 1300, 1275, 1252 and 1231
Above: 1315, 1331, 1354 and 1375

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to sharp gains in long positions on Tuesday. With gold posting sharp losses at the start of the week, numerous short positions were covered, resulting in a larger percentage of open long positions. The ratio currently has a strong majority of long positions, indicative of strong trader bias towards gold reversing directions and moving higher.

XAU/USD Fundamentals
9:00 German ZEW Economic Sentiment. Estimate 28.9 points. Actual 27.1 points.
9:00 European ZEW Economic Sentiment. Estimate 62.3 points. Actual 48.1 points.
12:30 US Core Retail Sales. Estimate 0.5%.
12:30 US Retail Sales. Estimate 0.6%.
12:30 US Empire State Manufacturing Index. Estimate 17.2 points.
12:30 US Import Prices. Estimate 0.5%.
14:00 US Federal Reserve Chair Janet Yellen Testifies Before Senate Banking Committee.
14:00 US Business Inventories. Estimate 0.6%.

*Key releases are highlighted in bold
*All release times are GMT

About Kenny Fisher

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.