Gold Dips to Three-Week Lows Ahead of US Data

After flirting with the $1300 mark on Monday, gold prices have moved the other way, dropping to the lowest levels seen since early in May. Late in the European session, the spot price stands at $1282.80 per ounce. In the US, the markets are back to work after the Memorial Day long weekend. We’ll get a look at two key events later in the day – Core Durable Goods Orders and CB Consumer Confidence.

The week did not start well for the EU, as anti-EU parties posted stunning victories in European parliamentary elections held on Sunday. These “eurosceptic” parties posted strong gains across the continent, notably in France, the UK and Greece. With Eurozone countries suffering from weak growth and high unemployment, voters had a chance to lash back in the  elections, and their frustration and anger was heard loud and clear at the ballot box. French Prime Minister Manuel Valls called the results an “earthquake” and the elections could weigh on the euro, although so far the currency has remained firm.

In the US, 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.

 

XAU/USD for Tuesday, May 27, 2014

Forex Rate Graph 21/1/13

XAU/USD May 27 at 11:30 GMT

XAU/USD 1282.80 H: 1293.39 L: 1281.64

 

XAU/USD Technical

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

 

  • Gold has lost ground on Tuesday.
  • 1280 is under pressure as gold has slipped. Next there is support at 1275.
  • 1300 is a strong resistance line.
  • 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 short positions in Tuesday trade. This is consistent with the pair’s movement, as gold has lost ground. The ratio has a substantial majority of long positions, reflecting a strong trader bias towards gold turning around and gaining ground against the US dollar.

Gold has lost ground on Tuesday. XAU/USD slipped in the Asian session, and is unchanged in European trading.

 

XAU/USD Fundamentals

  • 12:30 US Core Durable Goods Orders. Estimate 0.2%.
  • 12:30 US Durable Goods Orders. Estimate -0.5%.
  • 13:00 US S&P/CS Composite-20 HPI. Estimate 11.9%.
  • 13:00 US HPI. Estimate 0.5%.
  • 13:45 US Flash Services PMI. Estimate 55.6 points.
  • 14:00 US CB Consumer Confidence. Estimate 83.2 points.
  • 14:00 US Richmond Manufacturing Index. Estimate 5 points.

*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.