Gold Rally Continues, US Records Solid Employment Report

Gold has posted slight gains on Tuesday, as the metal continues its impressive rally against the US dollar. In the North American session, gold is trading at $1196.10 an ounce. In economic news, JOLTS Job Openings jumped to 5.61 million, easily beating expectations. On Wednesday, Fed Chair Janet Yellen testifies before the House Financial Services Committee in Washington. The markets will be listening closely, looking for clues regarding the timing of another rate hike.

Gold prices remain close to the symbolic $1200 line and are close to levels last seen in June. Financial turbulence in early 2016, caused by the Chinese slowdown and the collapse in oil prices, has spooked investors as stock markets around the world have suffered sharp losses. This has been great news for gold, has surged an outstanding 12 percent since the beginning of the year. The rally continued last week, as a host of key US indicators put up soft numbers, raising concerns about the strength of the US economy.

After a streak of weak US employment numbers last week, there was finally some positive news on Tuesday. JOLTS Job Openings, an important employment indicator, jumped to 5.61 million, compared to 5.41 million. This marked the indicator’s strongest showing in five months. US job numbers are an important factor in any decision by the Federal Reserve regarding another rate hike, and if upcoming employment indicators don’t show strong improvement, we’re unlikely to see any move by the Fed prior to mid-2016. We may get a look into the Fed mindset when Yellen testifies before Congress on Wednesday. If Yellen paints a pessimistic picture of the economy, market pessimism could intensify and gold could continue to climb against the dollar.

XAU/USD Fundamentals

Tuesday (Feb. 9)

  • 6:00 US NFIB Small Business Index. Estimate 94.6 points. Actual 93.9 points
  • 10:00 US JOLTS Job Openings. Estimate 5.41M. Actual 5.61M
  • 10:00 US Wholesale Inventories. Estimate -0.1%. Actual -0.1%

Upcoming Key Events

Wednesday (Feb. 10)

10:00 Fed Chair Janet Yellen Testifies

*Key releases are highlighted in bold

*All release times are EST

*Key events are in bold

XAU/USD for Tuesday, February 9, 2016

Forex Rate Graph 21/1/13

XAU/USD February 9 at 12:30 EST

Open: 1190.05 Low: 1185.66 High: 1198.83 Close: 1196.10

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1151 1175 1191 1205 1232 1255
  • XAU/USD was flat in the Asian session. XAU/USD lost ground in the European session and has been choppy in North American trade
  • 1191 remains busy and is providing weak support
  • There is resistance at 1205
  • Current range: 1191 to 1205

Further levels in both directions:

  • Below: 1191, 1175, , 1151, and 1134
  • Above: 1205 and 1232 and 1255

OANDA’s Open Positions Ratio

XAU/USD ratio has shown movement towards short positions. The ratio is close to an event split, indicative of a lack of trader bias as to what direction the pair might 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.

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.