Gold Dips Below $1060, Markets Await US Housing, PMI Releases

Gold is uneventful on Monday, as the metal trades at a spot price of $1056.62 in the European session. It’s a quiet start to the week, with just two events on the schedule – Chicago PMI and Pending Home Sales.

The day after Thanksgiving was not just Black Friday in the malls with low low prices, as gold prices dropped by more than 1 percent. The struggling base metal has now slipped to its lowest level since February 2010. November was a brutal month for the metal, which gave up about 7 percent of its value. With the markets eyeing a rate hike in December, and the US dollar continuing to pound its rivals, investors have little reason to turn to gold. A rate hike is bearish for gold, since gold becomes less competitive with yield-bearing assets. So increasing speculation about a rate hike has been bad news for the precious metal.

With the US continuing to post strong job numbers, speculation has increased that the Federal Reserve will change course and raise interest rates for the first time in ten years. Unemployment Claims were down sharply last week, and even a lukewarm Nonfarm Payroll report late in the week should not present an obstacle for the Fed. One nagging concern is that of low inflation levels, as the Fed has noted in the past that inflation is an important factor in the rate decision process. We’ll get a look at one more round of CPI and PPI reports prior to the Fed policy meeting on December 16, and these releases could cause some volatility in the markets if they are not close to the estimates. Meanwhile, the guessing game continues, and the markets will be closely following every key release and comments from Fed members in the two weeks leading up to the critical December policy meeting.

XAU/USD Fundamentals

Monday (Nov. 30) 

• 14:45 US Chicago PMI. Estimate 54.3 points
• 15:00 US Pending Home Sales. Estimate 1.6%

Upcoming Key Events

Tuesday (Dec. 1) 

• 15:00 US ISM Manufacturing PMI. Estimate 50.6 points

*Key releases are highlighted in bold

*All release times are GMT

XAU/USD for Monday, November 30, 2015

XAU/USD November 30 at 12:05 GMT

XAU/USD 1058.21 H: 1058 L: 1053

XAU/USD Technical

• XAU/USD has been uneventful in the Asian and European sessions.
• 1080 has strengthened in resistance as the pair continues to lose ground.
• 1043 is providing support.
• Current range: 1043 to 1080

Further levels in both directions:

• Below: 1043, 1024 and 980
• Above: 1080, 1098, 1134 and 1151

OANDA’s Open Positions Ratio

XAU/USD ratio continues to show little movement. Long positions continue to make up a strong majority (73%), indicative of strong trader bias towards gold prices reversing directions 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.