Gold Slide Continues Ahead of US GDP, Employment Data

Gold prices continue to slip on Thursday, as the metal is mired at levels not seen since early February. In the European session, the spot price stands at $1253.38 per ounce. In the US, there are three major events on the calendar – Preliminary GDP, Unemployment Claims and Pending Housing Sales.

Traders should be prepared for some movement from EUR/USD later on Thursday, as the US releases three market movers – Preliminary GDP, Unemployment Claims and Pending Home Sales. The markets are expecting a decline in the GDP reading, something which hasn’t occurred since 2009. Will the indicator surprise the markets with a gain in Q1? Pending Home Sales are expected to soften in April, while Unemployment Claims are expected to improve this week, after a disappointing performance in the previous release.

The US consumer continues to be optimistic, which is good news for the US recovery. On Tuesday, CB Consumer Confidence continued to look strong as the key indicator improved to 83.0 points in April, which was within expectations. This was the third straight reading above the 80-point level. Meanwhile, the Standard & Poor’s/Case-Shiller house price index posted a strong gain of 12.4%, surpassing the estimate of 11.9%. The markets are keeping a close eye on Thursday’s events, with the release of Preliminary GDP and the all-important Unemployment Claims.

The Eurozone is abuzz following stunning victories by anti-EU parties in European parliamentary elections held on Sunday. These “euroskeptic” 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. At the same time, the EU cannot afford a ‘business as usual’ approach after such elections results, so we could soon see changes in economic policies which could affect the euro.

 

XAU/USD for Thursday, May 29, 2014

 

XAU/USD May 29 at 10:55 GMT

XAU/USD 1254.57 H: 1254.90 L: 1253.38

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1200 1230 1250 1260 1275 1280

 

  • Gold has edged lower on Thursday.
  • 1250 is providing weak support as gold continues to soften. Next there is support at 1230.
  • 1260 is the next resistance line. The key level of 1275 is stronger.
  • Current range: 1250 to 1260.

Further levels in both directions:

  • Below: 1250, 1230, 1200 and 1182
  • Above: 1260, 1275, 1280, 1300, 1315

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in short positions in Thursday trade, reversing the direction we saw a day earlier. This is consistent with the direction of the pair, as gold has edged lower. 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 posted slight losses on Thursday. XAU/USD is unchanged in the European session.

 

XAU/USD Fundamentals

  • 12:30 US Preliminary GDP. Estimate -0.6%.
  • 12:30 US Unemployment Claims. Estimate 321K.
  • 12:30 US Preliminary GDP Price Index. Estimate 1.3%.
  • 14:00 US Pending Home Sales. Estimate 1.1%.
  • 14:30 US Natural Gas Storage. Estimate 110B.
  • 15:00 US Crude Oil Inventories. Estimate -0.1M.

*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.