Gold Unchanged After Sharp Gains on Friday

Gold is unchanged at the start of the week, as the pair trades at $1246.89 in Monday’s North American session. In economic news, it’s a very quiet start to the week. Monday’s only economic release, Labor Market Conditions Index, posted a decline of 4.9 points. As well, Fed chair Janet Yellen will deliver remarks at an event in Philadelphia. The markets will be listening carefully, looking for clues regarding a possible June rate hike.

US employment numbers continue to raise concerns. On Monday, the  Labor Market Conditions Index dropped 4.9 points, marking a fourth consecutive decline. This soft figure was not a major surprise, coming on the heels of a dismal Nonfarm Payrolls report on Friday. This event is one of the most important indicators, and a dismal April report of just 38 thousand has stunned the markets. The weak figure marked the smallest increase in payrolls since August 2010. The estimate stood at 159 thousand, which was almost identical to the previous release. The US dollar took a beating on the currency markets, and gold also jumped on the bandwagon, surging 2.9% in the North American session. Gold had been sliding since mid-May, and Friday’s surge has restored some luster to the metal.

The very weak US Nonfarm Payrolls report could have significant ramifications, and could mean that a June rate hike by the Federal Reserve is no longer on the table. A rate hike in July or September remains a possibility, but the markets will have to wait for the dust to settle from the NFP report before re-evaluating the odds of a rate move. Some of the plunge in the NFP release can be attributed to a strike by workers at Verizon, a major communications company. Still, even without this component, the indicator would have posted a gain of only 72,000, well short of expectations. In other employment news, Average Hourly Earnings, which measures wage growth, posted a weak gain of 0.2%. The unemployment rate fell to 4.7%, but workforce participation dropped to 62.6%.

XAU/USD Fundamentals

Monday (June 6)

  • 10:00 US Labor Market Conditions Index. Actual -4.8 points
  • 12:30 US Fed Chair Janet Yellen Speaks

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Monday, June 6, 2016

XAU/USD June 6 at 12:30 EDT

Open: 1248.22 Low: 1239.92 High: 1248.73 Close: 1246.63

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1191 1207 1232 1255 1279 1307
  • XAU/USD has shown limited movement in the Monday session
  • 1232 is providing support
  • There is resistance at 1255
  • Current range: 1232 to 1255

Further levels in both directions:

  • Below: 1232, 1207, 1191 and 1164
  • Above: 1255 and 1279 and 1307

OANDA’s Open Positions Ratio

XAU/USD ratio has  shown gains in short positions on Monday, consistent with gains by XAU/USD on Friday. Long positions maintain a strong majority (68%), indicative of trader bias towards XAU/USD continuing to move 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.