Gold Stable Ahead of ECB, Unemployment Claims

Gold is steady on Thursday, with a spot price of $1287.64 per ounce in the European session. The metal is in a holding pattern as the markets await a likely QE announcement from the ECB later in the day. There is also concern about the Greek elections on Sunday, as the Syriza party, which has promised to tear up Greece’s bailout agreement, leads in the polls. In the US, today’s highlight is Unemployment Claims, with the indicator expected to dip to 301 thousand.

Gold has taken a breather from its impressive run as it trades close to the $1300 level. Gold has been a winner from the recent volatility in the currency markets, as investors have looked to gold as a safe haven in recent weeks. The metal has posted strong gains since the SNB announcement last Thursday, when the SNB suddenly abandoned its cap that set EUR/CHF at 1.20, sending shock waves across global markets. This resulted in the euro recording sharp losses against the Swiss franc and the US dollar.

As the markets nervously eye the ECB policy meeting on Thursday, is this the calm before the storm? On Wednesday, French President Francois Hollande stated flat out that the ECB will announce a quantitative easing package at the ECB meeting. However, now that a QE is likely priced in, the question remains what will be the size of the program? The markets are anticipating QE of between EUR 500-600 billion, but some market players are saying that the ECB could go as high as EUR 800 billion. Will the euro take a hit on Thursday? The likelihood is yes, unless the ECB surprises with a “QE lite”, such as EUR 300 billion, which would be well below expectations.

XAU/USD for Thursday, January 22, 2015

XAU/USD January 22 at 10:45 GMT

XAU/USD 1291.75 H: 1303.38 L: 1290.15

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1240 1255 1275 1300 1322 1345

 

  • XAU/USD edged higher in the Asian session. The pair is unchanged in the European session.
  • On the downside, 1275 has some breathing room as the pair has moved higher. 1255 is next.
  • On the upside, 1300 is under strong pressure. Will the pair break through during the day? 1322 is stronger.
  • Current range: 1275 to 1300

Further levels in both directions:

  • Below: 1275, 1255, 1240, 1215 and 1200
  • Above: 1300, 1322, 1345 and 1375

 

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged on Thursday, continuing the pattern we have seen for most of the week. This is not consistent with the pair’s movement, as gold has posted slight losses. The ratio has a majority of long positions, indicating trader bias towards gold moving to higher ground.

XAU/USD Fundamentals

  • 13:30 US Unemployment Claims. Estimate 301K.
  • 14:00 US HPI. Estimate 0.4%.
  • 15:00 US Consumer Confidence. Estimate -11 points.
  • 15:30 US Natural Gas Storage. Estimate -231B.
  • 16:00 US Crude Oil Inventories. Estimate 2.5M.

*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.