XAU/USD – Gold Lower at Start of Week

Gold has posted losses on Monday, trading at a spot price of $1263.65 an ounce in the North American session. On the release front, it’s a very quiet start to the week, with just one US event on the schedule. US Labor Markets Conditions Index posted a third straight decline, coming in at -0.9 points.

Is the US labor market showing signs of fatigue? Nonfarm Payrolls looked awful in April, as the key indicator slid to just 160 thousand, well short of the forecast of 203 thousand. This marked the lowest reading in seven months. There was concern that NFP, one of the most important indicators, would post soft numbers after weak job numbers earlier this week. The ADP Nonfarm Payroll report dropped to 156 thousand, compared to an estimate of 205 thousand and Unemployment Claims jumped to 274 thousand, missing the estimate of 261 thousand. In other releases on Friday, wage levels showed no change, as Average Hourly Earnings posted a weak gain of 0.3%. The unemployment rate remained steady at 5.0%. Gold took advantage of the soft payrolls number and posted gains on Friday, but has reversed directions on Monday.

Will the Federal Reserve raise rates in the near future? In its April policy statement, the Fed didn’t raise rates, but the message to the markets with regard to the US economy was one of cautious optimism. The statement noted continuing improvement in the labor market but added that it was keeping a watchful eye on low inflation levels. The Fed appeared to leave the open to a June hike, but the weak payrolls report has greatly reduced the likelihood of a June move. On Friday, New York Fed president William Dudley said he remains confident that the Fed could raise rates as much as twice this year, but many analysts are skeptical if the Fed will raise rates before 2017.

 

XAU/USD Fundamentals

Monday (May 9)

  • 10:00 US Labor Markets Conditions Index. Actual -0.9 points

*Key releases are highlighted in bold

*All release times are EDT

 

XAU/USD for Monday, May 9, 2016

XAU/USD May 9 at 11:40 EDT

Open: 1285.68 Low: 1262.78 High: 1287.58 Close: 1263.61

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1207 1232 1255 1279 1303 1324
  • XAU/USD was flat in the Asian session. The pair has dropped steadily in the European and North American sessions.
  • 1255 is providing support
  • There is resistance at 1279
  • 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 is showing long positions with a majority (58%). This is indicative of trader bias towards XAU/USD reversing directions and climbing 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.