Gold Under Pressure, Dips Under $1300

Gold has dipped under the key level of $1300, as the spot price stands at $1298.67 per ounce late the European session. The metal has now slipped about 2% in little over a week. In the US, Unemployment Claims looked excellent, dropping to its lowest level in over eight years. New Home Sales will be released later in the day.

Unemployment Claims dropped unexpectedly last week, as the key indicator fell to 298 thousand, its lowest level since February 2008. This continues a string of strong employment data, and the dollar could get a boost from the good news. Earlier in the week, Core CPI posted a paltry gain of 0.1%, shy of the estimate of 0.2%. The key index has looked anemic in 2014, with its highest gain this year at just 0.3%. CPI was bit stronger, as it gained 0.3% last month, matching the forecast. On a bright note, Existing Home Sales jumped to 5.04 million, surpassing the estimate of 4.94 million. This was the best showing we’ve seen since October, and follows a disappointing release from Housing Starts, which was published last week.

Geopolitical tensions are bad news for the markets, which crave stability. With violence continuing in Ukraine and Gaza, nervous investors have rallied around the safe-haven US dollar as well as gold, at the expense of other currencies. In Ukraine, the downing of a Malaysian Airlines jet, apparently by pro-Russian separatists, has seriously frayed relations between the West and Russia, which have already been strained since the latter annexed Crimea. Fighting continues between the separatists and Ukrainian forces in Eastern Ukraine. The Europeans are threatening stronger sanctions against Russia, and escalating tensions in eastern Ukraine could shake up the markets. In the Middle East, the fighting in Gaza between Hamas and Israel has intensified, as Israel presses on with a ground offensive and casualties rise. The international community is intensifying efforts to broker a cease-fire, but in the meantime the fighting rages on.

XAU/USD for Thursday, July 24, 2014

XAU/USD July 24 at 13:00 GMT

XAU/USD 1298.67 H: 1304.85 L: 1294.89

XAU/USD Technical

• XAU/USD edged lower in the Asian session and slipped below the key 1300 line. The pair is unchanged in the European session.
• The round number of 1300 is under strong pressure. 1315 is stronger.
• 1275 is an immediate support line. 1252 follows.
• Current range: 1275 to 1300.

Further levels in both directions:

• Below: 1275, 1252, 1240 and 1218.
• Above: 1300, 1315, 1331, 1354

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in long positions on Thursday. This is not consistent with the pair’s movement, as gold continues to lose ground. The ratio has a majority of long positions, indicative of trader bias towards gold reversing directions and moving upwards.

XAU/USD Fundamentals

• 12:30 US Unemployment Claims. Estimate 310K. Actual 298K.
• 13:45 US Flash Manufacturing PMI. Estimate 57.5 points.
• 14:00 US New Home Sales. Estimate 485K.
• 14:30 US Natural Gas Storage. Estimate 95B.

*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.