Gold Remains Strong, Briefly Climbs Close to $1280

Gold is trading on Tuesday at a spot price of $1265.45 per ounce in the North American session. On the release front, the sole US event on the schedule is the NFIB Small Business Index. The indicator slipped to 92.9 points, well below the estimate of 94.5 points.

Gold often shows strength in periods of uncertainty or economic turmoil, and the turbulence engulfing global markets in the first two months of 2016 have seen gold prices rise sharply. The metal is currently trading close to its highest level since February 2015. Gold prices surged 3.1% last week, bolstered by a lukewarm US services sector report and disappointing wage growth report.

Last week’s US jobs numbers painted a mixed picture. Nonfarm Payrolls surged to 242 thousand in January, much higher than the estimate of 195 thousand. This marked an impressive jump from the previous reading of 171 thousand. The US economy has added an average of 225,000 jobs per month since December, an excellent number considering that the economy has softened in the early part of 2016. Still, employment news was mixed, as wage growth declined by 0.1%, shy of the estimate of a 0.2% gain. This marked the first drop in wages since December 2014. This indicator is closely linked to inflation, since an increase in wages means workers have more money to spend. A decline in wage growth means underscores weak inflation levels, nowhere near the Federal Reserve’s inflation target of about 2.0%. This means that a March rate hike is very unlikely. This is good news for gold prices, as a rate increase would make the US dollar more attractive at the expense of gold.

XAU/USD Fundamentals

Tuesday (March 8)

  • 6:00 US NFIB Small Business Index. Estimate 94.5. Actual 92.9 

*Key releases are highlighted in bold

*All release times are EST

XAU/USD for Tuesday, March 8, 2016

Forex Rate Graph 21/1/13

XAU/USD March 8 at 12:20 EST

Open: 1267.81 Low: 1262.53 High: 1278.06 Close: 1264.80

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1205 1232 1255 1279 1303 1337
  • XAU/USD was flat in the Asian session. The pair posted gains in the European session but has surrendered these gains in North American trade
  • 1255 is providing support
  • There is resistance at 1279
  • Current range: 1255 to 1279

Further levels in both directions:

  • Below: 1255, 1232, 1205 and 1191
  • Above: 1279, 1303 and 1327

OANDA’s Open Positions Ratio

XAU/USD ratio is almost unchanged this week, consistent with the lack of movement from XAU/USD. Long positions currently have a majority (56%), indicative of trader bias towards gold heading 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.