Gold Jumps on Weak US Nonfarm Payrolls

Gold is steady on Monday, following sharps gains on Friday. In the European session, the spot price stands at $1166.93. It’s a quiet day on the release front, with no US releases until Thursday.

Gold prices jumped about 3% on Friday, as the metal reversed directions following sharp losses during the week. Gold took advantage of a weak US Nonfarm Payrolls report, which were well below expectations. Gold hit a low of $1130 last week, its lowest level since April 2010.

Mario Draghi and his ECB colleagues haven’t had much to cheer about lately, with the Eurozone stuck with low growth, weak inflation and high unemployment. Draghi has lowered interest rates to the bone, but the cuts have not improved the economic situation. The ECB has decided to focus on its balance sheet and has issued long-term loans to banks and purchased covered bonds. The ECB will begin buying asset-backed purchases later this month, so we could see the wobbly euro lose more ground. However, these moves may not be enough and Draghi may be forced to borrow a page from the book of other central banks and commence quantitative easing, which is the purchase of government securities.

US Nonfarm Payrolls disappointed on Friday, as the key employment indicator slipped to 214 thousand, well short of the estimate of 235 thousand. On a brighter note, the Unemployment Rate slipped to 5.8%, its lowest level in six years. On Thursday, Unemployment Claims fell to 278 thousand. This was better than the estimate of 285 thousand and marked a three-week low.

 

XAU/USD for Monday, November 10, 2014

XAU/USD November 10 at 11:10 GMT

XAU/USD 1166.93 H: 1177.74 L: 1166.64

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1111 1130 1156 1175 1200 1215

 

  • Gold edged lower in the Asian session breaking below support at 1175. The pair has edged lower in European trade.
  • 1175 has reverted to a resistance line as gold has posted slight losses. This weak line could see further action during the day. The round number of 1200 is stronger.
  • 1156 is providing support.
  • Current range: 1156 to 1175.

Further levels in both directions:

  • Below: 1156, 1130, 1111, 1073 and 1041
  • Above: 1175, 1200, 1215 and 1240

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in short positions on Monday. This is consistent with the pair’s movement, as gold has posted small losses. The ratio has a majority of long positions, indicative of trader bias in favor of gold moving higher.

 

XAU/USD Fundamentals

  • There are no US releases on Monday.

*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.