Gold (XAU/USD) – Wait for a Breakout after the FOMC Meeting Minutes

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Gold (XAU/USD) - Wait for a Breakout after the FOMC Meeting Minutes

Gold prices have been capricious in the near-term since a mid-late June rally. After a false break above 1326, prices dipped after last week’s NFP that boosted the USD. However, gold failed to challenge the recent consolidation lows around 1306, maintaining bullish bias within consolidation.

gold 4h chart 7/8

Today, traders attempted to push gold price back towards recent highs, but there was a strong reaction at 1325 and price is now stuck in the middle of the consolidation range. In the 7/8 US session, the Bureau of Labor Statistics (BLS) released the monthly Jobs Opening and Labor Turnover survey. The BLS reported 4.64M job openings at the end of May, which is slightly better than April’s 4.46M. Forecasts called for a reading around 4.53M. This was nothing too surprising to the upside, but does reflect a trend of increasing job openings, which is encouraging for the labor market.

Last week, NFP data showed 288K jobs added in June. The increasing job opening readings have been accompanied with relatively strong jobs reports, and are helping traders keep some confidence in USD ahead of tomorrow’s FOMC meeting minutes release. These positive USD-releases are keeping gold in consolidation during this couple of weeks.

JOLT- Job Openings
US job openings May 2014
(Source: Forexfactory.com)

As you can see from the historical chart of job openings, the uptrend has brought the reading above the levels right before the financial meltdown. The FOMC meeting minutes would not address last week’s NFP or today’s job openings data, so if it is not dovish, the USD should gain because of the positive data we know that followed the last FOMC meeting.

FOMC Meeting Minutes:

We should probably wait for gold to break out of its current 1306 to 1332 range which should happen after the FOMC meeting minutes tomorrow. Neutral to dovish minutes should allow Gold to challenge the consolidation high, and the more dovish it is, the more likely XAU/USD will break towards 1350.

Relatively hawkish FOMC minutes means the Fed sounds like it is maintaining the rate hike expectation for mid-2015, and is keeping the same growth expectations despite the Q1 GDP revision (to an annualized -2.9%).

Because we saw some good jobs data following the previous FOMC meeting, we can see a neutral statement as hawkish.

gold 7/8 daily chart

I noted that 1350 is a bullish target for a bullish breakout. It is an area of common highs seen in March. If the break is below 1305, then the support levels to monitor are at 1285, 1277 and 1268.

To contact the reporter of this story, email Fan Yang at fan@forexminute.com
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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.