Gold Calm at Start of Week

Gold is showing little movement on Monday, continuing the trend that marked most of last week’s trading. In the European session, the spot price is at $1314.92 per ounce. On the release front, today’s highlight is Pending Home Sales, with the markets expecting a strong reading for May.

Last Friday, Ukraine signed an association agreement with the EU, which strengthens economic and political ties between Ukraine and the EU. Earlier in the year, the decision by the Ukrainian president not to sign the deal led to widespread demonstrations and the installation of a new government in Kiev. Predictably, Russia is upset about the trade deal and has warned about consequences if its economic interests are harmed as a result of the agreement. The situation remains tense in eastern Ukraine, and a flare-up in violence could rattle the markets and affect gold, which tends to gain ground on geopolitical instability.

XAU/USD was uneventful last week, as US releases were mixed. US Unemployment Claims on Thursday, which has not shown much movement in the month of June. The key indicator came in at 312 thousand, slightly better than the estimate of 314 thousand. Earlier in the week, GDP shocked the markets with a five-year low and durables softened as well. GDP dropped by 2.9%, much worse than the 1.8% loss expected by the markets. Core Durable Goods Orders declined by 0.1%, its first decline in five months. The estimate stood at 0.3%. Durable Goods Orders looked even worse, coming in at -1.0%, shy of the estimate of -0.1%. On a positive note, CB Consumer Confidence improved in May, and this could translate into stronger consumer spending, which is critical for economic growth.

 

XAU/USD for Monday, June 30, 2014

XAU/USD June 30 at 11:05 GMT

XAU/USD 1313.74 H: 1314.92 L: 1311.97

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1260 1275 1300 1315 1331 1354

 

  • Gold edged higher in the Asian session, touching a high of 1317.62. The pair has retracted in the European session.
  • The round number of 1300 is providing support.
  • 1315 has switched to a resistance role and is a weak line. 1331 is stronger.
  • Current range: 1300 to 1315.

Further levels in both directions:

  • Below: 1300, 1275, 1260 and 1231
  • Above: 1315, 1331, 1354 and 1375

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in short positions in Friday trade. This is reflected in the pair’s movement, as gold has posted very small losses to start off the week. The ratio is made up of a majority of long positions, reflecting trader bias towards gold moving higher against the greenback.

 

XAU/USD Fundamentals

  • 13:45 US Chicago PMI. Estimate 63.2 points.
  • 14:00 US Pending Home Sales. Estimate 1.4%.

*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.