Gold Unchanged Ahead of US Jobless Report

Gold is unchanged on Wednesday, as the spot price is $1177 per ounce early in the North American session. The only economic release on the schedule is US Crude Oil Inventories. As well, FOMC member Jerome Powell will speak at an event in New York. Traders should keep a close eye on Thursday’s key event – US Unemployment Claims.

The markets got their first look this week at key data from the US on Tuesday, as US housing numbers were a mix. Building Permits dipped to 1.10 million in September, shy of the estimate of 1.16 million. This marked a 6-month low for the key indicator. There was much better news from US Housing Starts, which jumped to 1.21 million in the September report, easily beating the forecast of 1.14 million. There were mixed messages from US releases on Friday as well. UoM Consumer Sentiment, the primary gauge of consumer confidence, jumped to 92.1 points in October, up from 85.7 points. This easily beat the estimate of 88.8 points. At the same time, JOLTS Job Openings slipped to 5.37 million, way off the estimate of 5.77 million. The JOLTS release is especially important as it is watched closely by the Fed and is a factor in its decision-making process regarding monetary policy.

Gold prices have staged a recovery, gaining over 5 percent in October. Gold prices briefly pushed above $1190 last week, its highest level since June. The metal has benefitted from the lack of action and conflicting messages from the Federal Reserve. The markets were looking for an interest rate hike in September, but the Fed didn’t make a move, and FOMC members continue to muddy the waters with contradictory statements about a rate hike. The resultant market disappointment and confusion has helped boost gold prices. Even if the Fed does raise rates, many analysts expect gold prices to remain stable, as the rate increases will likely be applied in small increments.

US numbers have been mixed recently, which has reduced the likelihood of a rate hike by the Federal Reserve before the end of 2016. The Fed hasn’t cleared the air, as FOMC members continue to send out contradictory messages about the Fed’s plans regarding a rate hike. Still, an improvement in US numbers, especially employment and consumer indicators, could quickly revive speculation about a rate hike and boost the US dollar against its major rivals. This means that the upcoming US Unemployment Claims report will be carefully monitored, and an unexpected reading could have a sharp impact on the direction of the US dollar. The estimate stands at 266 thousand, higher than the previous report of 255 thousand.

XAU/USD Fundamentals

Wednesday (Oct. 21)

• 14:30 US Crude Oil Inventories. Estimate 3.5M
• 17:30 FOMC Member Jerome Powell Speaks

Upcoming Releases

Thursday (Oct. 22)

• 12:30 US Unemployment Claims. Estimate 266K.

*Key releases are highlighted in bold

*All release times are GMT

XAU/USD for Wednesday, October 21, 2015

USD/CAD October 21 at 11:55 GMT

USD/CAD 1177 H: 1179 L: 1177

XAU/USD Technical

• XAU/USD has shown little movement on Wednesday.
• 1162 continues to provide support.
• 1180 is a weak resistance line and could be tested during the North American session.
• Current range: 1162 to 1180

Further levels in both directions:

• Below: 1162, 1151 and 1134
• Above: 1180, 1192 and 1204

OANDA’s Open Positions Ratio

XAU/USD ratio remains close to an even split between long and short positions, indicative of a lack of trader bias regarding which direction gold will take next.

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.