Gold has posted considerable losses on Tuesday, after showing limited movement in the Monday session. Spot gold is trading at $1268.76 per ounce in the North American session, marking a 10-day low. In economic news, there are no US economic releases for a second straight day. The markets will be listening closely to Federal Reserve Chair Janet Yellen, who will testify before the Senate Banking Committee and answer questions from lawmakers about the Fed’s Monetary Policy Report.
Is the United Kingdom In or Out? That is the burning question facing millions of Britons, who will go to the polls on Thursday, as the UK votes in a historic referendum on whether to remain in the EU. The campaign between the “In” and “Out” camps will go down to the wire, as polls predict a close vote. The British pound, which has become a barometer of the vote, has posted gains against the US dollar and the yen on Tuesday, bolstered by recent polls which show the “In” camp with a slight lead. Prime Minister David Cameron and prominent business leaders have warned that that a vote to leave the EU would hurt the UK economy, and a recent Treasury report says an EU exit will wipe out 800,000 jobs in the UK and cause a recession. The “Out” camp counters that EU over-regulation has stifled British businesses, and point to countries such as Switzerland that have close economic relations with the EU but are not part of the bloc. Still, leaving the comfort zone of the EU would clearly be a journey into the unknown, and analysts predict that if the UK exits the EU, the pound could dive by as much as 10 percent.
Gold is sensitive to interest rate moves, so we could see further volatility from the metal on Tuesday, following testimony from Janet Yellen before a Senate committee. With the Fed remaining on the sidelines at its June policy meeting, will we see any rate hikes this year? In the heady days of December when the Fed raised interest rates by a quarter-point, there was talk of up to four hikes in 2016. Fast forward to June, and the Fed hasn’t made a move so far this year. Many analysts are predicting only one hike in 2016, but on Friday, St. Louis Fed President James Bullard said that the economy may need just one hike in the next 2-1/2 years. Bullard did not mince words, bluntly stating that the Fed had done a poor job in its predictions about the US economy, and said the markets have no faith in the Fed’s “dot plot” of projected interest rate policy, as the Fed’s actual pace of rate hikes was much slower than its projections. Bullard added that this “mismatch” between words and action had caused distortions in the global financial markets and eroded credibility in the Federal Reserve.
XAU/USD Fundamentals
Tuesday (June 21)
- 14:00 Federal Reserve Chair Janet Yellen Testifies
*Key releases are highlighted in bold
*All release times are EDT
XAU/USD for Tuesday, June 21, 2016
XAU/USD June 20 at 12:30 EDT
Open: 1289.23 Low: 12645.41 High: 1294.28 Close: 1268.76
XAU/USD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1207 | 1232 | 1255 | 1279 | 1307 | 1331 |
- XAU/USD has been marked by choppy trading and has posted small losses in the Monday session
- 1279 has switched to a resistance role following losses by XAU/USD in the Tuesday session
- There is resistance at 1255
- Current range: 1255 to 1279
Further levels in both directions:
- Below: 1255, 1232 and 1207
- Above: 1279, 1307, 1331 and 1361
OANDA’s Open Positions Ratio
XAU/USD ratio is showing little change on Tuesday. with Long positions have a small majority (52%), indicative of slight trader bias towards XAU/USD reversing directions and moving to higher levels.