Gold Listless in Holiday Trade

Gold was mostly flat last week, and the trend has continued on Monday. In the European session, the spot price stands at $1293.47 per ounce. It’s a very quiet day on the release front, with the US markets closed for the Memorial Day holiday. There is some nervousness in the markets following strong showings by anti-EU parties in European parliamentary elections, which took place on the weekend.

With Eurozone countries suffering from weak growth and high unemployment, voters had a chance to lash back in European parliamentary elections on the weekend, and their frustration and anger was heard loud and clear at the ballot box. Anti-EU and far-right parties in the UK, Germany and France made sweeping gains. French Prime Minister Manuel Valls called the results an “earthquake” and the elections could have an effect on gold prices.

US employment releases disappointed on Thursday. Unemployment Claims has looked sharp over the past two releases, but the short streak came to an end, as the key employment indicator climbed to 326 thousand, up from 297 thousand a week earlier. This missed the estimate of 312 thousand. With future QE tapers by the Federal Reserve contingent on solid economic data, key employment releases such as Unemployment Claims will continue to be closely scrutinized by the markets. Elsewhere, key housing data was a mix, as Existing Home Sales fell short of expectations, while New Home Sales improved sharply in April and easily beat the estimate.

The Federal Reserve minutes were released last week, and there was no dramatic response from the markets. In the minutes, policymakers discussed an exit strategy from its QE stimulus program, which is set to terminate at the end of 2014. This will likely mean an increase in interest rates, but the minutes didn’t provide a timetable as to when rates might go up, and by how much. Low inflation levels means there is less pressure on the Fed to raise rates next year, but the economic conditions could change in the meantime. The Federal Reserve remains comfortable with its accommodative stance, and will want to see stronger growth and employment numbers before making changes to monetary policy, such as raising rates.

 

XAU/USD for Monday, May 26, 2014

Forex Rate Graph 21/1/13

XAU/USD May 26 at 10:35 GMT

XAU/USD 1293.47 H: 1294.16 L: 1291.11

 

XAU/USD Technical

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

 

  • Gold is steady on Monday.
  • 1280 continues to provide support. Next there is support at 1275.
  • 1300 is the next resistance line. The next line of resistance is at 1315.
  • 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 pointing to gains in long positions in Monday trade. This is 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 gaining ground more ground against the US dollar.

Gold is showing little movement on Monday. XAU/USD is steady in the European session.

 

XAU/USD Fundamentals

* There are no releases out of the US 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.