Gold Stable Ahead of Employment Data, Fed Minutes

Gold is steady on Wednesday, with the metal trading at a spot price of $1212.05 per ounce in the European session. In the US, today’s key releases are the ADP Nonfarm Payrolls and Trade Balance. As well, the Federal Reserve will release the minutes of its last policy meeting.

Eurozone inflation numbers remained mired at low levels in key December reports. Eurozone CPI dipped to -0.2%, its first decline in over five years. German CPI wasn’t much stronger, coming in at 0.0% for the second straight month. The readings come at a crucial time, with the ECB holding a policy meeting on January 22. With the threat of deflation hanging over the Eurozone like a dark cloud, the ECB could respond with quantitative easing, which would mean buying large amounts of Eurozone bonds. QE worked well in the US, but the Federal Reserve was calling the shots and was able to implement and then taper QE as it pleased. It’s a far different story in Europe, as the powerful German Bundesbank has voiced its opposition to such a move and ECB head Mario Draghi will find it difficult to take such a dramatic step without a strong consensus. If the ECB does pull the ECB trigger, the shaky euro is likely to fall even further early in 2015.

In the US, the ISM Non-Manufacturing PMI, a key indicator, dropped sharply to 56.2 points in December, its lowest reading in six months. The index was well off the forecast of 58.2 points. On the manufacturing front, there was more bad news as Factory Orders posted a drop of 0.7%, marking a fourth straight decline. This was short of the forecast of -0.3%. This follows a disappointing Manufacturing PMI, which also missed  expectations. There was more bad news from the manufacturing front on Tuesday, as Factory Orders posted a drop of 0.7%, marking a fourth straight decline. This was short of the forecast of -0.3%.

XAU/USD for Wednesday, January 7, 2015

XAU/USD January 7 at 12:10 GMT

XAU/USD 1213.21 H: 1218.62 L: 1212.05

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1156 1175 1200 1215 1240 1255

 

  • XAU/USD was steady in the Asian session. The pair has tested resistance at 1215 in the European session.
  • 1200 is an immediate support line. 1175 is next.
  • On the upside, 1215 remains under pressure. Will the pair break through this level in the North American session? 1240 is stronger.
  • Current range: 1200 to 1215

Further levels in both directions:

  • Below: 1200, 1175, 1156, 1130 and 1111
  • Above: 1215, 1240, 1255 and 1275

 

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged on Wednesday. This is consistent with the very limited movement shown by the pair. The ratio is close to a split between open and short positions, indicating a lack of trader bias as to what direction the pair will take next.

XAU/USD Fundamentals

  • 13:15 US ADP Nonfarm Employment Change. Estimate 227K.
  • 13:30 US Trade Balance. Estimate -42.3B.
  • 15:30 US Crude Oil Inventories. Estimate 0.9M.
  • 19:00 US FOMC Meeting Minutes.
  • 23:30 FOMC Member Charles Evans 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.