Improving Gold Shrugs Off Strong Jobless Claims

Gold is steady on Friday, as the spot price stands at $1222.69 per ounce in the European session. The metal has enjoyed a strong week, climbing about 3% against the US dollar. On Thursday, US Unemployment Claims were unchanged at 287 thousand. The trading week wraps up on a quiet note, with no major US events on the calendar.

Gold has recovered nicely this week and received a boost from an unexpectedly dovish FOMC statement earlier in the week. The statement poured some cold water on rising expectations of a rate hike, as a number of policymakers said that the Federal Reserve should take a more data-dependent approach regarding a rate hike. The Fed also voiced concern about the rising strength of the US dollar which could weigh on the recovery. These factors could well support keeping the current accommodative policy in place and has boosted gold prices.

US Unemployment Claims were unchanged, coming in at 287 thousand for a second straight week. This beat the estimate of 291 thousand. The indicator has now exceeded the forecast for four straight readings. Earlier in the week, JOLTS Job Openings climbed to 4.84 million, up from 4.67 million a month earlier. These numbers follow last week’s excellent Nonfarm Payrolls, pointing to a stronger job market in the US. With QE slated to end later this month, the focus will shift to the timetable for an interest rake hike, which could take place in the first half of 2015.

Speaking in Washington on Wednesday, ECB President Mario Draghi said that that he doesn’t expect a rise in interest rates prior to 2017.Draghi defended recent monetary moves by the ECB, saying that the central bank had “acted aggressively” in easing monetary policy, such as sharp interest rate reductions and asset purchases. However, he said that the ECB could not repair the Eurozone economy on its own, and urged Eurozone member states to enact economic reforms. Meanwhile, the IMF has reduced its growth and inflation forecasts for the Eurozone for 2014, with growth expected at 0.8% and inflation at 0.5%.

XAU/USD for Friday, October 10, 2014

XAU/USD October 10 at 10:45 GMT

XAU/USD 1222.69 H: 1225.01 L: 1217.40

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1156 1186 1215 1240 1252 1275

 

  • Gold has been uneventful in the Asian and European sessions.
  • 1215 is providing weak resistance and could be tested during the day 1186 is stronger.
  • 1240 is the next resistance line.
  • Current range: 1215 to 1240.

Further levels in both directions:

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

 

OANDA’s Open Positions Ratio

XAU/USD ratio has a majority of long positions, indicative of trader sentiment in favor of gold continuing to gain ground.

 

XAU/USD Fundamentals

  • 12:30 US Import Prices. Estimate -0.5%.
  • 13:00 US FOMC Member Charles Plosser Speaks.
  • 18:00 US Federal Budget Balance.
  • 19:30 US FOMC Member Richard Fisher 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.