Listless Gold Mired Below $1300

Gold prices have been flat all week, and this trend continues on Wednesday. In the European session, the spot price stands at 1289.04 an ounce. On the release front, ISM Non-manufacturing PMI posted strong gains in July, rising to 58.7 points. Wednesday’s major event is Trade Balance, with little change expected in the upcoming release.

Gold is sensitive to geopolitical events, as investors often seek the safety of the precious metal in response to global turmoil . However, despite the fighting in Gaza and turmoil in eastern Ukraine, gold prices have been steady over the past three weeks, hovering close to the key $1300 level. Israel and Hamas appear to be adhering to the most recent ceasefire, but the situation remains fluid in the Ukraine. If tensions between the West and Russia worsen, we could see gold benefit and post gains against the dollar.

On Tuesday, ISM Non-manufacturing PMI looked sharp, rising to 58.7 points last month. This easily beat the estimate of 56.6, and was the index’s best showing since February 2011. This follows a strong Manufacturing PMI reading last week, with the index climbing to 57.1 points, a three-year high. There was more positive news on Tuesday, as Factory Orders had an impressive July, gaining 1.1%. These solid numbers point to healthy expansion in the US manufacturing and services sectors, and have helped strengthen the dollar and keep gold prices below $1300.

 

XAU/USD for Wednesday, August 6, 2014

XAU/USD August 6 at 10:10 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, unable to break out of range trading.
  • 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 Wednesday, continuing the trend we saw a day earlier. This is consistent with the lack of movement we continue to see 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

  • 12:30 US Trade Balance. Estimate -44.2B.
  • 14:30 US Crude Oil Inventories. Estimate -1.1M.

*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.