Gold Prices at 7-Month Lows as Greenback Shows Broad Strength

Gold has been heading south all week, and the downward trend has continued on Friday, as the metal broke through support at $1240. In the European session, the spot price stands at $1237.38 per ounce, the metal’s lowest level since January. Taking a look at Friday’s fundamental events, In the US, it’s a busy day with the release of three major events – Retail Sales, Core Retail Sales and UoM Consumer Sentiment.

US employment data disappointed on Thursday. Unemployment Claims rose to 315 thousand, the largest number of claims in 10 weeks. The reading was much higher than the estimate of 306 thousand. This follows soft numbers from JOLTS Job Openings and a dismal Nonfarm Payrolls last week. The troubling job numbers are unlikely to affect the Fed’s plan to continue trimming QE next week, but a weak labor market could postpone plans to raise interest rates by mid-2015.

After months of fighting in eastern Ukraine between government forces and pro-Russian fighters, a week-long ceasefire appears to be holding, although some sporadic fighting has been reported. Russia has denied assisting the rebels, but both Ukraine and NATO have said that Russian forces are in Ukraine and have taken part in the fighting. The crisis has severely strained relations between the West and Russia, and trade between Europe and Russia has suffered as a result. On Thursday, European countries and the US slapped further sections on Russia, which they said would be cancelled if the ceasefire continues to hold.

 

XAU/USD for Friday, September 12, 2014

XAU/USD September 12 at 10:05 GMT

XAU/USD 1237.38  H: 1240.75  L:1232.18

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1156 1186 1210 1240 1252 1275

 

  • XAU/USD broke below support at 1240 early in the Asian session. The pair has traded quietly in the European session.
  • On the downside, 1210 is an immediate support line. 1186 is stronger.
  • 1240 has reverted to a resistance role after providing support since January. 1252 is the next resistance line.
  • Current range: 1210 to 1240.

Further levels in both directions:

  • Below: 1210, 1186, 1156 and 1111
  • Above: 1240, 1252, 1275, 1300, and 1315

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in short positions on Friday, reversing the direction seen a day earlier. This is consistent with the movement we’re seeing from the pair, as gold continues to lose ground. The ratio has a substantial majority of long positions, indicative of trader bias towards gold reversing its downward movement against the dollar.

 

XAU/USD Fundamentals

  • 12:30 US Core Retail Sales. Estimate 0.2%.
  • 12:30 US Retail Sales. Estimate 0.3%.
  • 12:30 US Import Prices. Estimate -0.8%.
  • 13:55 US Preliminary UoM Consumer Sentiment. Estimate 83.2 points.
  • 13:55 US Preliminary UoM Inflation Expectations.
  • 14:00 US Business Inventories. Estimate 0.5%.

*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.