Gold Rises on Weak US Data, Iraqi Worries

Gold is steady on Friday, after gains a day earlier. In the European session, the spot price stands at $1273.98 per ounce. The precious metal gained ground on Thursday following weak retail sales and employment numbers. It has also benefited from concerns over Iraq, where fighting between insurgents and government forces has intensified. On the release front, there are two major events on the calendar – Producer Price Index and UoM Consumer Sentiment.

Thursday’s key US events were a major disappointment, as retail sales and employment numbers were weak. Retail Sales came in at 0.3%, short of the estimate of 0.5%. Core Retail Sales could only muster a gain of 0.1%, shy of the forecast of 0.4%. Unemployment Claims, one of the most important economic indicators, rose to 317 thousand, missing market expectations of 306 thousand. Gold took advantage of the soft US numbers, gaining about $11 on the day.

In Iraq, the threat of civil war has deepened as insurgents have moved closer to the capital of Baghdad. The insurgents have seized control of the northern oil city of Kirkuk, which could hamper oil production and exports from Iraq. Gold prices climbed on Thursday to two-week highs, as concerned investors sought the safety of the precious metal, which often benefits from geopolitical instability.

 

XAU/USD for Friday, June 13, 2014

XAU/USD June 13 at 9:20 GMT

XAU/USD 1273.98 H: 1277.27 L: 1270.82

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1230 1250 1260 1275 1300 1315

 

  • 1260 continues to provide support. Next there is a support line at 1250.
  • On the upside, the key level of 1275 is under strong pressure as gold has moved higher. Will XAU/USD break above this line? This is followed by resistance at the round number of 1300.
  • Current range: 1260 to 1275.

Further levels in both directions:

  • Below: 1260, 1250, 1230 and 1200
  • Above: 1275, 1300, 1315 and 1331

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in short positions on Friday. This is not consistent with what we are seeing from the pair, which is showing little activity. The ratio is made up of a substantial majority of long positions, reflecting a strong trader bias towards gold breaking out and gaining ground against the US dollar.

Gold continues to show little movement. XAU/USD is almost unchanged in the European session.

 

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 83.2 points.
  • 13:55 US Preliminary UoM Inflation Expectations.

*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.