Gold Under Pressure From Strong US Employment Data

Gold prices is stable on Monday, as the spot price stands at $1319.30 per ounce in the European session. Last Thursday’s strong employment numbers have bolstered the dollar and weighed on the precious metal. It’s a quiet start to the week, with no US releases on Monday.

US employment numbers were the perfect prelude to a long holiday weekend in the US, as Nonfarm Payrolls and the Unemployment Rate sparkled. Nonfarm Payrolls, one of the most important indicators, bounced back in June with a strong gain of 288 thousand new jobs. This crushed the estimate of 214 thousand. Unemployment Claims was steady at 315 thousand, almost replicating the estimate of 314 thousand. There was more good news from the Unemployment Rate, which continues to move downward. The indicator dipped to 6.1%, its lowest level since September 2008. The strong employment numbers are sure to increase speculation about an interest rate hike by the Federal Reserve, and remarks by Fed policymakers will be under the market microscope.

As widely expected, the ECB maintained the benchmark interest rate at 0.15% at its July policy meeting. This was is sharp contrast to the previous meeting, in which the ECB lowered the benchmark rate from 0.25% and introduced negative deposit rates for the first time. At this week’s meeting, ECB head Mario Draghi noted that inflation rates remain very low, and said that the ECB was ready to implement “unconventional instruments” if necessary. As well, Draghi reiterated that the ultra-low interest rates would remain at current levels or lower for the foreseeable future.

 

XAU/USD for Monday, July 7, 2014

XAU/USD July 7 at 11:10 GMT

XAU/USD 1319.30 H: 1323.20 L: 1318.60

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1275 1300 1315 1331 1354 1375

 

  • XAU/USD edged lower in Asian session and is unchanged in European trading.
  • 1315 remains an immediate support line. The round number of 1300 is stronger.
  • 1331 is the next resistance line.
  • Current range: 1315 to 1331.

Further levels in both directions:

  • Below: 1315, 1300, 1275 and 1260
  • Above: 1331, 1354, 1375 and 1388

 

OANDA’s Open Positions Ratio

XAU/USD is almost unchanged on Monday, continuing the trend for most of last week. This is reflected in the pair’s lack of movement. The ratio has a slight majority of long positions, pointing to trader bias towards gold breaking out and moving to higher levels against the US dollar.

XAU/USD Fundamentals

*There are no US releases 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.