Gold Remains Weak, Pressing on Support at $1200

Gold prices are showing little change on Wednesday, as the metal remains under pressure from the strong US dollar. In the European session, the spot price stands at $1208.93 per ounce. There are two key releases on the calendar – ADP Non-Farm Employment Change and ISM Manufacturing PMI. The markets are not expecting significant changes from last month’s readings.

Recent sharp gains by the US dollar are weighing on gold prices, as a stronger dollar diminishes the metal’s appeal as an alternative asset to the dollar. The dollar has enjoyed a spectacular September, and gold prices have tumbled over 6% during this period. With the Fed scheduled to wind up QE and attention shifting to the timing of an interest rate hike, gold could continue to move lower.

The markets are keeping a close eye upcoming US employment numbers, starting with ADP Nonfarm Payrolls later on Wednesday. The estimate stands at 207 thousand, little changed from 204 thousand. The ADP release precedes the official NFP release which will be published on Friday. The markets are anticipating a sharp gain, with an estimate of 216 thousand. If the indicator does follow suit with better numbers this month, the US dollar could post further gains against its major rivals.

US Pending Home Sales posted a decline of 1.0%, compared to last month’s gain of 3.3%. The important housing indicator has shown strong movement, resulting in readings that have been well off market estimates. US housing indicators continue to paint a mixed picture, as New Home Sales jumped last month, while Existing Home Sales softened and was well short of expectations.

 

XAU/USD for Wednesday, October 1, 2014

XAU/USD October 1 at 10:45 GMT

XAU/USD 1209.18 H: 1209.94 L: 1204.66

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1136 1156 1186 1215 1240 1252

 

  • XAU/USD has been uneventful in the European and Asian sessions.
  • 11186 remains an immediate support level. 1156 is next.
  • 1215 is providing weak resistance. 1240 is stronger.
  • Current range: 1186 to 1215.

Further levels in both directions:

  • Below: 1186, 1156, 1136 and 1101
  • Above: 1215, 1240, 1252, 1275 and 1300

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in short positions in Wednesday trade. This is not consistent with the pair’s movement, as gold is showing little movement. Trader sentiment is strongly in favor of long positions, which make up most of the positions in the ratio.

 

XAU/USD Fundamentals

  • 12:15 US ADP Nonfarm Employment Change. Estimate 207K.
  • 13:45 US Final Manufacturing PMI. Estimate 58.0 points.
  • 14:00 US ISM Manufacturing PMI. Estimate 58.6 points.
  • 14:00 US Construction Spending. Estimate 0.5%.
  • 14:00 US ISM Manufacturing Prices. Estimate 56.8 points.
  • 14:30 US Crude Oil Inventories. Estimate 0.6M.
  • All Day – US Total Vehicle Sales. Estimate 16.9M.

*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.