Gold Slides on Strong Manufacturing PMI

Gold has steadied on Wednesday, following sharp losses a day earlier. Late in the European session, the spot price stands at $1269.15 per ounce. It’s a quiet day on the release front, with no major US events on the calendar.

As hostilities continue in the Ukraine between government forces and pro-Russian fighters, Ukrainian President Petro Poroshenko on Wednesday announced a cease-fire in eastern Ukraine. Whether the latest attempt at a truce will last, however, is doubtful. Russia has denied assisting the rebels, but both Ukraine and NATO have charged that Russian forces are involved in the fighting. The crisis has severely strained relations between the West and Russia, and could continue to have repercussions on the price of gold.

US numbers continue to impress the markets. On Tuesday, ISM Manufacturing PMI impressed the markets, climbing to 59.0 points, its best showing since April 2011. The index easily beat the estimate of 57.0 points. The strong showing follows an unexpectedly strong GDP, which hit 4.2%. With the US economy moving forward at a fast clip, the US dollar has responded with strong gains against gold. Employment data will be in the spotlight for the remainder of the week, with the release of ADP Nonfarm Payrolls on Thursday, followed by the official Nonfarm Payrolls and the unemployment rate on Friday.

 

XAU/USD for Wednesday, September 3, 2014

XAU/USD September 3 at 12:05 GMT

XAU/USD 1269.15 H: 1271.31 L: 1261.31

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1210 1240 1252 1275 1300 1315

 

  • XAU/USD has showed little movement in the Asian and European sessions.
  • 1252 is an immediate support line. This is followed by support at 1240.
  • 1275 has reverted to a resistance role after Tuesday’s sharp losses by the pair. The round number of 1300 is next.
  • Current range: 1252 to 1275.

Further levels in both directions:

  • Below: 1252, 1240, 1210 and 1186
  • Above: 1275, 1300, 1315 and 1331

 

OANDA’s Open Positions Ratio

XAU/USD ratio continues to have a substantial majority of long positions, indicative of trader bias towards gold recovering and moving to higher levels.

 

XAU/USD Fundamentals

  • 14:00 US Factory Orders. Estimate 10.9%.
  • All Day – US Day Total Vehicle Sales. Estimate 16.5M.
  • 18:00 US Beige Book.

*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.