Gold Stable After Recent Slide

Gold prices have stabilized on Monday, as the spot price trades at $1172.17 per ounce in the European session. Last week, gold tumbled 4.4%, falling  to its lowest level since December 2013. On the release front, today’s highlight is ISM Manufacturing PMI. The markets are expecting little change in the upcoming release, with an estimate of 56.5 points.

It was another solid performance from US GDP on Thursday, which posted a strong gain of 3.5% in Q3, ahead of the estimate of 3.1%. Although this was short of the Q2 reading of 4.0%, the two readings mark the strongest six-month gain we’ve seen in ten years. Unemployment Claims increased slightly to 287 thousand, slightly higher than the previous reading of 284 thousand. However, the four-week average remains at multi-year lows, pointing to an improving labor market.

The US dollar posted strong gains against gold on Wednesday, boosted by a hawkish Fed policy statement. The Fed said that the labor market is strengthening and inflation remains on target, although it did note that the labor market participation rate remains low. As expected, the Fed completed the taper of its QE3 program. The asset-purchase program was introduced in 2008, at the height of the economic crisis, in order to boost a weak US economy and maintain interest rates at ultra-low levels. The termination of the QE is a symbolic step which is a vote of confidence from the powerful Fed that the US economy is on the right track.

 

XAU/USD for Monday, November 3, 2014

XAU/USD November 3 at 11:20 GMT

XAU/USD 1172.17 H: 1173.47 L: 1161.56

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1111 1130 1156 1200 1215 1240

 

  • Gold has been listless in the Asian and European sessions.
  • 1200 is the next resistance line.
  • On the downside, 1156 is an immediate support level.
  • Current range: 1156 to 1200.

Further levels in both directions:

  • Below: 1156, 1130, 1111 and 1073
  • Above: 1200, 1215, 1240, 1252 and 1275

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in short positions on Monday. This is not consistent with the pair’s movement, as gold has posted slight gains. The ratio has a majority of long positions, indicative of trader bias in favor of gold continuing to move higher.

 

XAU/USD Fundamentals

  • 14:45 US Final Manufacturing PMI. Estimate 56.1 points.
  • 15:00 US ISM Manufacturing PMI. Estimate 56.5 points.
  • 15:00 US Construction Spending. Estimate 0.8%.
  • 15:00 US ISM Manufacturing Prices. Estimate 58.3 points.
  • All Day – US Total Vehicle Sales. Estimate 16.6M.

*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.