Gold Showing Little Movement Ahead of Key US Data

Gold prices are steady in Friday trading, as the spot price stands at $1317 early in the European session. On the release front, the US will release two major events, Producer Price Index and UoM Consumer Sentiment. On Thursday, Unemployment Claims looked very sharp, but gold prices still posted a gain on the day.

In the US, Unemployment Claims rebounded sharply, as the key indicator dropped to 300 thousand last week. This beat the estimate of 314 thousand and marked the lowest reading since May 2007. With the Federal Reserve looking to trim its QE program and speculation rising about a possible interest rate increase, every employment release is under the market microscope.

The Federal Reserve minutes were eagerly awaited by the markets on Wednesday, but the minutes didn’t deliver much in the way of breaking news. Policymakers expressed concern about speculation over a possible rise in interest rates, but didn’t say when the central bank might change its current monetary policy. Under its QE program, the Fed is purchasing $55 billion in assets every month. There have been three tapers to QE so far, and the Fed chair Janet Yellen has said that the Fed plans to wind up QE late in the year. However, if there are any setbacks on the inflation or employment fronts, the Fed could be forced to delay further tapers. As the tapers are dollar-positive, any delay would be bearish for the greenback.

Gold often moves higher as a result of geopolitical turmoil, as investors turn to the safe-haven commodity in times of trouble. One of the world’s hottest trouble spots is in Ukraine, particularly its border with Russia. Increasing tensions between the West and Russia over this tense situation has boosted gold, which was trading at $1281 just over a week ago. After annexing the Ukrainian region of Crimea in lighting speed, Russia has massed forces on its western border with Ukraine, although its says its has no interest in attacking Ukraine. The situation could easily spill out of control and this could lead to a negative reaction from the markets and send gold even higher.

 

XAU/USD for Friday, April 11, 2014

Forex Rate Graph 21/1/13

XAU/USD April 11 at 9:50 GMT

XAU/USD 1318.88 H: 1321.65 L: 1314.08

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1260.98 1273.78 1312.62 1338.98 1355.80 1388.54

 

  • XAU/USD is steady in Friday trade. The pair dipped to a low of 1314.08 earlier in the European session.
  • 1312.62 is providing support. This is followed by a support level at 1273.68
  • 1338.98 is providing strong resistance.
  • Current range: 1312.62 to 1338.98

Further levels in both directions:

  • Below: 1312.62, 1273.78, 12.60.98, 1241.75 and 1215.64
  • Above: 1338.98, 1355.80, 1388.54 and 1403.24

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in long positions on Friday. The ratio has a substantial majority of long positions, reflecting a strong trader bias towards gold moving higher against the dollar.

Gold is steady in Friday trading. XAU/USD is showing some movement in the European session, and this could continue in the North American session, as the US releases key consumer confidence and inflation data later in the day.

 

XAU/USD Fundamentals

  • 12:30 US PPI. Estimate 0.1%.
  • 12:30 US Core PPI. Estimate 0.2%.
  • 13:55 US Preliminary UoM Consumer Sentiment. Estimate 81.2 points.
  • 13:55 US Preliminary UoM Inflation Expectations.
  • 14:30 US Natural Gas Storage. Estimate 15B.

*Key releases are highlighted in bold

*All release times are GMT

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
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.