Gold Steadies After Recent Surge

Gold prices are steady as we start the new trading week. In Monday’s European session, the spot price stands at $1309.82 an ounce. On the release front, there is only one release on the schedule, as Federal Reserve Governor Stanley Fischer speaks at a conference in Stockholm.

Gold crossed above the $1300 level last week, climbing as high as $1322 on Friday. The precious metal has benefited as the crises in Ukraine and Iraq have worsened. The US has accused Russia of massing troops on its border with Ukraine, and tensions are high as the EU has slapped stronger sanctions on Russia, while Moscow has retaliated by banning many food imports from the West. In Iraq, Islamic State militants, who have captured large parts of Iraq, have attacked and displaced thousands of ethnic Kurds, which has resulted in a growing humanitarian crisis. On Thursday, US President Barak Obama authorized air strikes against the militants in order to protect the Kurds and safeguard US interests. The situation in Iraq is volatile and could quickly destabilize even further.

As expected, the ECB maintained interest rates at 0.15% at its policy meeting last week. ECB head Mario Draghi didn’t add anything dramatic in his press conference, acknowledging that the Eurozone continues to grapple with weak growth and inflation levels. Draghi said that the ECB forecasts “moderate” improvement in growth and that interest rates will remain at current levels for the near future. On the inflation front, Draghi does not expect any improvement before 2015. With interest rates already at record lows, the ECB may be forced to resort to unconventional monetary tools if the situation worsens.

US releases enjoyed a solid week, led by the ISM Non-Manufacturing PMI and Unemployment Claims. The PMI, which measures the strength of the services sector, climbed to 58.6 points, a ten-month high. Unemployment Claims dropped to 289 thousand, beating the estimate of 305 thousand. The four-week claims average, which is less volatile than the weekly count, dipped to 293,500, its lowest level since February 2006. The improving labor market points to a growing economy, and the dollar has gained broad strength thanks to solid economic data.

 

XAU/USD for Monday, August 11, 2014

XAU/USD August 11 at 10:15 GMT

XAU/USD 1308.64 H: 1309.21 L: 1305.21

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1252 1275 1300 1315 1331 1345

 

  • XAU/USD has been stable in the Asian and European sessions.
  • 1315 is the next resistance line. It could face pressure if XAU/USD weakens. 1331 follows.
  • The round number of 1300 has reverted to a support role. 1275 is stronger.
  • Current range: 1300 to 1315.

Further levels in both directions:

  • Below: 1300, 1275, 1252 and 1240
  • Above: 1315, 1331, 1345 and 1361

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in long positions on Monday. This is not consistent with the movement of the pair, as gold is almost unchanged. The ratio continues to have a substantial majority of long positions, indicative of trader bias towards gold breaking out and posting gains.

 

XAU/USD Fundamentals

7:15 US Federal Reserve Governor Stanley Fischer Speaks.

*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.