Gold Kicks Off Week With a Whimper

Gold is flat on Monday, as the spot price stands at $1304.37 in the European session. On the release front, it’s a quiet day, highlighted by Pending Home Sales.

In the US, a mostly positive week ended on a high note, as durable goods data exceeded expectations. Core Durable Goods Orders jumped 0.8%, beating the estimate of 0.6%, and rebounding nicely from a decline of 0.1% in May. Durable Goods Orders followed suit, posting a gain of 0.7%, compared to a weak reading of -1.0% last month. This easily surpassed the estimate of 0.4%. Earlier last week, Unemployment Claims tumbled, as the key indicator fell to 284 thousand, its lowest level since February 2008. This surprised the markets, which had expected a reading of 310 thousand. The strong release continues a string of solid employment data, which has helped the dollar. As well, positive news on the employment front is bound to increase speculation about a rate increase by the Federal Reserve.

Gold prices are sensitive to geopolitical events, and there are two hotspots that could affect prices in a hurry if the current situation deteriorates. In the Ukraine, tensions remain high after the downing of a Malaysian jetliner, and sporadic fighting continues between pro-Russian separatists and Ukrainian forces. On the weekend, the US accused Russia of firing on Ukrainian positions from its territory. The second trouble spot is in Gaza, as fighting rages between Hamas and Israel. The fighting has continued for over three weeks, and the US is intensifying efforts to halt the violence, which has proven to be a monumental task, as numerous ceasefires have been declared and broken.

 

XAU/USD for Monday, July 28, 2014

XAU/USD July 28 at 10:40 GMT

XAU/USD 1304.37 H: 1309.27 L: 1301.28

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1252 1275 1300 1315 1331 1354

 

  • XAU/USD has shown little movement in the Asian or European sessions.
  • 1315 is an immediate resistance line.
  • 1300 has reverted to a support role and is a weak line. 1275 is stronger.
  • Current range: 1300 to 1315.

Further levels in both directions:

  • Below: 1300, 1275, 1252 and 1240
  • Above: 1315, 1331, 1345 and 1366

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in short positions on Monday. This is consistent with the pair’s movement, as the pair has posted small gains. The ratio has a majority of long positions, indicative of trader bias towards gold prices moving upwards.

 

XAU/USD Fundamentals

  • 13:45 US Flash Services PMI. Estimate 62.3 points.
  • 14:00 US Pending Home Sales. Estimate -0.2%.

*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.