Gold Edges Up to $1300 Level

Gold has posted slight gains to start off the new trading week. In Monday’s European session, the spot price stands at $12.99.86 per ounce.  On Friday, there was mixed news out of the US, as Building Permits shot higher while UoM Consumer Sentiment weakened in April. It’s a quiet start to the week, with no US releases on Monday.

In the US, last week ended with encouraging housing numbers. Building Permits jumped to 1.08 million, well above the estimate of 1.01 million. This was the highest level we’ve seen since December 2006. Housing Starts continues to move higher and climbed to 1.07M, compared to the estimate of 0.98M. This marked a five-month high. Meanwhile, UoM Consumer Sentiment dipped to 81.8 points, short of the estimate of 84.7 points.

Although inflation numbers have not impressed, employment and manufacturing numbers looked sharp on Thursday. Unemployment Claims were outstanding, dropping to 297 thousand last week. This easily beat the estimate of 321 thousand and was the lowest level we’ve seen since May 2007. On the manufacturing front, the Philly Fed Manufacturing Index dipped to 15.4 points, but this was well above the estimate of 13.9 points. As well, Empire State Manufacturing Index climbed to 19.0 points, crushing the estimate of 5.5. This was the indicator’s best showing in two years.

The crisis in Ukraine continues, in what has become the worst East-West crisis since the end of the Cold War. Relations between Russia and the West have deteriorated as Europe and the US have slapped sanctions on Russia. However, the Europeans have been less than enthusiastic about ratcheting up the pressure, as Europe is dependent on Russia for energy supplies. Elections scheduled in Ukraine for May 25 remain in jeopardy and there are mounting fears that the country could slide into civil war, as fighting continues between government and separatist forces.

 

XAU/USD for Monday, May 19, 2014

Forex Rate Graph 21/1/13

XAU/USD May 19 at 10:50 GMT

XAU/USD 1299.86 H: 1301.56 L: 1291.68

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1260 1275 1280 1300 1315 1330

 

  • 1280 is providing support. This is followed by support at 1275.
  • On the upside, 1300 is under strong pressure. 1315 is the next resistance level.
  • Current range: 1280 to 1300.

Further levels in both directions:

  • Below: 1280, 1275, 1260 and 1252
  • Above: 1300, 1315, 1330, 1350 and 1388

 

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in Monday trade. This is not consistent with the pair’s movement, as gold has edged higher. The ratio has a substantial majority of long positions, reflecting a strong trader bias towards gold continuing to gain ground against the US dollar.

Gold has edged higher as it tests the 1300 line. XAU/USD is steady in the European session.

 

XAU/USD Fundamentals

  • There are no US releases on Monday.

 

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.