Gold Calm As Rangebound Trade Continues

Gold prices are showing little movement on Tuesday. Late in the European session, the spot price stands at $1289.07 an ounce. On the release front, there is just one event in the US, ISM Non-manufacturing PMI. The markets are expecting a slight improvement in the July reading, with an estimate of 56.6 points.

US employment numbers were a disappointment last week, although there was good news in other sectors, and these solid releases have boosted the US dollar and kept gold prices under $1300. On Friday, Nonfarm Payrolls took a tumble, slipping to 209 thousand, compared to 288 thousand a month earlier. This was well below the estimate of 231 thousand and marked a four-month low. Earlier in the week, Unemployment Claims rose to 302 thousand, very close to the estimate of 303 thousand. There was positive news from the manufacturing sector, as US ISM Manufacturing PMI rose to 57.1 points, its best showing since November. As well, UoM Consumer Sentiment continues to look strong, coming in at 81.8 points. The index has not been below the 80-point level in 2014, pointing to strong consumer confidence.

There were no surprises from last week’s Federal Reserve policy statement, which was somewhat dovish in tone. Policymakers acknowledged lower US unemployment levels, but noted that “there remains significant underutilization of labor resources” in the economy. The Fed statement reinforces the view that the US central bank is in no rush to raise interest rates after the termination of QE, which is expected in October. As well, the Fed said that inflation levels have moved somewhat closer to the Fed’s target of 2.0%. The Fed has remained vague as to when it will raise interest rates, but if the economy continues moving in the right direction, a rate increase is likely before mid-2105.

 

XAU/USD for Tuesday, August 5, 2014

XAU/USD August 5 at 12:50 GMT

XAU/USD 1289.07 H: 1293.54 L: 1287.29

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1240 1252 1275 1300 1315 1331

 

  • XAU/USD has been steady in the Asian and European sessions. The pair touched a high of 1293.54 early in the European session.
  • 1300 remains an immediate resistance line. 1315 is stronger.
  • 1275 is providing support. 1252 is next.
  • Current range: 1275 to 1300.

Further levels in both directions:

  • Below: 1275, 1252, 1240 and 1208
  • Above: 1300, 1315, 1331 and 1345

 

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged on Tuesday. This is consistent with the lack of movement we are seeing from the pair. The ratio has a strong majority of long positions, indicative of trader bias towards gold breaking out of its current range and moving higher.

 

XAU/USD Fundamentals

  • 14:00 ISM Non-Manufacturing PMI. Estimate 56.6 points.
  • 14:00 US Factory Orders. Estimate 0.6%.
  • 14:00 US IBD/TIPP Economic Optimism. Estimate 46.2 points.

*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.