Gold Struggling at $1140

Gold has started the new trading week with marginal losses, as the spot price per ounce is $1137 in the European session. In economic news,  Monday’s key event is US ISM Manufacturing PMI, with the index expected to come in at 50.0 points.

Gold has slumped in the past two weeks, with the precious metal losing 4 percent in that period. Echoing the movement of the euro, gold was hammered by the ECB and the Federal Reserve in late October, sustaining sharp losses as a result of statements from the two central banks. In the case of the ECB, it was a broad hint of further easing that sent gold lower. Last week, gold prices slipped as the Federal Reserve surprised the markets, stating that a rate hike in December was very much on the table. Investors snapped up US dollars after the ECB and Fed announcements, ditching their euros as well and gold holdings in the process.

Last week’s Federal Reserve’s policy statement was surprisingly hawkish and transparent, as the Fed said that a rate hike was a possibility in December, depending on employment and inflation numbers. The markets had essentially written off a move by the Fed before 2016, so the statement caused sharp volatility in the currency markets, with the US dollar showing broad gains after the dust had settled. With the next Fed meeting is mid-December, and the markets will be in alert mode for any further hints about a rate hike. As well, key US numbers will be closely monitored, especially employment and inflation data, as the strength of these numbers in the next several weeks will play a critical role in determining whether the Fed will press the rate trigger in December. Still, traders should keep in mind that the markets sometimes overreact to Fed statements or comments from Fed policymakers, and the central bank could easily continue to wait on the sidelines until 2016.

With the Federal Reserve statement behind us, the markets can once again focus on economic releases. There was much anticipation ahead of the US Advance GDP for the third quarter, which was released on Thursday. As it turned out, this key event didn’t shake up the markets, as the reading of a 1.5% gain was almost identical to the forecast of 1.6%. Still, this figure is much lower than the Q2 Final GDP of 3.9%, pointing to a slowdown in the US economy. Meanwhile, Unemployment Claims beat the estimate for a fourth straight week, coming in at 260 thousand. The estimate stood at 264 thousand. On Friday, US key releases wound up the week on a positive note. Employment Cost Index jumped to 0.6%, pointing to an increase in wages for US workers. The UoM Consumer Sentiment improved to 90.0 points, within expectations.

 

XAU/USD Fundamentals

Monday (Nov. 2)

  • 14:45 US Final Manufacturing PMI. Estimate 54.0 points
  • 15:00 US ISM Manufacturing PMI. Estimate 50.0 points
  •  15:00 US Construction Spending. Estimate 0.5%
  •  15:00 US ISM Manufacturing Prices. Estimate 39.5 points
  • 17:00 FOMC Member John Williams Speaks
  • 19:00 US Loan Officer Survey

*Key releases are highlighted in bold

*All release times are GMT

 

XAU/USD for Monday, November 2, 2015

Forex Rate Graph 21/1/13

XAU/USD November 2 at 12:00 GMT

XAU/USD 1137 H: 1143 L: 1136

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1080 1098 1134 1151 1162 1180
  • XAU/USD is flat in the Asian and European sessions.
  • 1151 has switched to a resistance line.
  • On the downside, 1134 is under strong pressure and could break during the day.
  • Current range: 1134 to 1151

Further levels in both directions:

  • Below: 1134, 1098 and 1080
  • Above: 1151, 1162, 1180 and 1192

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to strong movement towards long positions, which have a strong majority (62%). This is indicative of trader bias towards gold reversing direction and moving to higher levels.

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.