Gold Continues to Post Gains, Trading Close to $1240

Gold has posted gains on Tuesday, trading at the spot price of $1239.84 per ounce in the European session. The pair is currently at its highest level in 10 weeks. On the release front, today’s major event is JOLTS Job Openings. The markets are expecting a strong reading of 4.86 million.

What’s ailing the euro? The New Year hasn’t brought much cheer for the common currency, which has recorded sharp losses so far in 2015. EUR/USD is currently at its lowest level since November 2005. With the Eurozone showing little growth or inflation, efforts by the ECB, including cutting rates to almost zero haven’t had the desired effect, and a sluggish Eurozone economy has meant a softer euro. The ECB may be forced to play its trump card, quantitative easing. This would involve the purchase of large amounts of Eurozone bonds, which could strengthen the US dollar. The markets are on a “QE watch”, waiting to see what happens at the ECB’s next policy meeting next Thursday. On the weekend, the Italian central bank voiced its support for QE, noting that the Eurozone is at risk of deflation.

US releases wrapped up the week in fine fashion, as employment data shined. Nonfarm Employment Change, one of the most important indicators, posted a gain of 252 thousand, easily beating the estimate of 241 thousand. The unemployment rate fell to 5.6%, edging below the forecast of 5.7%. Meanwhile, Average Earnings dropped 0.2%, its first decline since July 2013. A lack of wage pressure means that the Fed may be able to postpone a rate hike until the second half of 2015, and a delay in raising rates could hurt the greenback and boost gold prices.

XAU/USD for Tuesday, January 13, 2015

XAU/USD January 13 at 11:15 GMT

XAU/USD 1239.84 H: 1244.21 L: 1230.77

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1175 1200 1215 1240 1255 1275

 

  • XAU/USD posted modest gains in the Asian session. The pair continues to move higher in European trade and is testing resistance at 1240.
  • On the downside, 1215 has some breathing room as gold has moved higher. The round number of 1200 is next.
  • On the upside, 1240 is fluid and could break during the day.
  • Current range: 1215 to 1240

Further levels in both directions:

  • Below: 1215, 1200, 1175, 1156 and 1130
  • Above: 1240, 1255, 1275 and 1300

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in long positions on Tuesday. This is consistent with the pair’s movement, as gold continues to post gains. The ratio remains 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

  • 15:00 US JOLTS Jobs Openings. Estimate 4.86M.
  • 15:00 US IBD/TIPP Economic Optimism. Estimate 48.9 points.
  • 18:01 US 10-year Bond Auction.
  • 19:00 US Federal Budget Balance. Estimate 3.8B.

*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.