Gold Posts Small Losses, US Jobless Claims Jump

Gold has posted slight losses on Thursday, trading at a spot price of $1275.36 an ounce in the North American session. On the release front, Unemployment Claims jumped to 274 thousand, higher than expected. On Friday, the US releases three key employment indicators – Average Hourly Earnings, the Unemployment Rate and Nonfarm Payrolls.

Gold prices remain strong, as the metal has surged 20 percent in 2016, taking advantage of uncertain global economic conditions and a dovish Federal Reserve, which has remained on the sidelines since raising rates in December 2015. We could see volatility from the metal on Friday, with the release of Nonfarm Payrolls, one of the most important indicators. A soft release would raise concern about the strength of the US economy and could send gold to higher levels.

The US labor market has looked excellent in 2016, but this week’s employment numbers have raised concerns with weak numbers. Unemployment Claims jumped to 274 thousand, marking the third straight week that the indicator has risen. This reading was higher than the forecast of 261 thousand, and marked a five-week high. This release comes on the heels of ADP Nonfarm Payrolls, which dropped sharply in April to 156 thousand. This was the weakest reading in over two years, and surprised the markets, which have grown accustomed to releases above the 200-thousand level. We’ll get a look at the all-important Nonfarm Payrolls on Friday. Although the employment picture has been a bright spot in the US economy, consumer confidence and spending have not kept pace. Last week, UoM Consumer Sentiment dipped to 89.0 points short of the estimate of 90.3 points. This also marked the fourth straight drop for the key indicator. Consumer spending is a key engine of economic activity, and softer numbers in the first quarter were an important reason that US GDP weakened in the first quarter, with a lukewarm reading of 0.5%.

XAU/USD Fundamentals

Thursday (May 5)

  • 7:30 US Challenger Job Cuts. Actual 5.8%
  • 8:30 US Unemployment Claims. Estimate 261K. Actual 274K
  • 10:30 US Natural Gas Storage. Estimate 69B. Actual 68B
  • 11:30 US FOMC Member James Bullard Speaks
  • 19:15 US FOMC Member James Bullard Speaks

Upcoming Key Events

Friday (May 6)

  • 8:30 US Average Hourly Earnings. Estimate 0.3%
  • 8:30 US Nonfarm Employment Change. Estimate 203K
  • 8:30 US Unemployment Rate. Estimate 5.0%

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Thursday, May 5, 2016

XAU/USD May 5 at 12:25 EDT

Open: 1282.76 Low: 1274.11 High: 1286.53 Close: 1275.36

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1207 1232 1255 1279 1303 1324
  • XAU/USD has shown limited movement during the day
  • 1255 is providing support
  • 1279 remains fluid and is currently a weak resistance line
  • Current range: 1255 to 1279

Further levels in both directions:

  • Below: 1255, 1232 and 1207
  • Above: 1279, 1303, 1324 and 1345

OANDA’s Open Positions Ratio

XAU/USD ratio has shown movement towards long positions on Thursday. Long positions have a majority (55%), indicative of trader bias towards XAU/USD 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.