Gold Steady at $1090, Markets Eye US Jobless Claims

Gold prices are steady on Wednesday, as the metal trades at $1089.30 an ounce in the North American session. On the release front, there are no major US events on the schedule. Crude Oil Inventories posted a small surplus of 0.2 million, well below expectations. The next major release is Unemployment Claims, which will be released on Thursday.

Gold was up sharply last week, the beneficiary of a move by jittery investors who dumped risky assets in favor of safe-haven assets like gold. The week started with poor Chinese data, and tensions in the Middle East and North Korea bolstered the base metal. A surprise devaluation of the yuan by Chinese authorities helped propelled gold to a high of $1111 last week, its highest level since November 2014. However, it’s been a completely different story this week, as gold has slipped 1.5% percent in value, posting daily losses for three straight sessions. The reversal in gold’s fortunes is largely due to an improvement in the situation in China, with the stock markets and the yuan recovering this week. Still, gold has gained a respectable 2.5 percent in January, as nervous investors keep a worried eye over events in China and geopolitical uncertainties.

Recent US employment numbers have been impressive, underscoring a robust US labor market. The November JOLTS Job Openings improved to 5.43 million, beating the estimate of 5.41 million and above the previous reading of 5.38 million. Late last week, Nonfarm Employment Change surged to 292 thousand, crushing the estimate of 203 thousand. This was the strongest reading in 10 months. The unemployment rate remained unchanged at 5.0%, within the Federal Reserve’s definition of “full employment”. One area of concern in the employment picture is that of wage growth, which has not kept up with the strong improvement in payrolls. Even if the US economy is technically at “full employment”, slack remains in the labor market, meaning that employers are not under any pressure to raise wages. This was underscored by the Average Hourly Earnings in December, which posted a flat reading of 0.0%, short of the forecast of 0.2%. This key event is a leading indicator of consumer inflation, meaning that wages must increase before consumers will spend more, thus leading to more inflation. The Fed has hinted that the December rate is the first of a series of incremental moves in 2016, and inflation levels will play an important role in any decision to raise rates.

XAU/USD Fundamentals

Wednesday (Jan. 13)

• 10:30 US Crude Oil Inventories. Estimate 1.9M. Actual 0.2M
• 13:01 US 10-year Bond Auction
• 14:00 US Beige Book
• 14:00 US Federal Budget Balance. Estimate -2.7B

Upcoming Key Events

Thursday (Jan. 14)

• 8:30 US Unemployment Claims. Estimate 275K

*All release times are GMT

*Key events are in bold

XAU/USD for Wednesday, January 13, 2016

XAU/USD January 13 at 11:30 GMT

Open: 1086.30 Low: 1079.59 High: 1091.30 Close: 1089.30

XAU/USD Technical

• XAU/USD was flat in the Asian session. The pair posted losses in European trade and has been choppy in the North American session.
• There is resistance at 1098
• 1080 is providing support
• Current range: 1080 to 1098

Further levels in both directions:

• Below: 1080, 1043 and 1024
• Above: 1098, 1134, 1151 and 1175

OANDA’s Open Positions Ratio

XAU/USD ratio is showing slight movement towards long positions, which retain a solid majority (67%), indicative of strong trader bias towards gold prices reversing the recent downward trend and moving higher.

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.