Gold Continues to Climb, US Jobless Claims Dip

Gold has posted slight gains on Thursday, continuing the upward movement we saw in the Wednesday session. XAU/USD is trading at $1269.88 in the North American session. This marks the metal’s highest level in three weeks. There was positive on the employment front, as Unemployment Claims dipped to 264 thousand, beating expectations. On Friday, the US will release UoM Consumer Sentiment, with the indicator expected to dip to 94.1 points.

Last week’s Nonfarm Payrolls of just 38,000 new jobs shocked the markets and sent the US dollar tumbling. A couple of minor employment indicators were soft, leading to some concern about the strength of the US labor market. However, these concerns should be laid to rest after key job numbers this week were solid and beat expectations. On Wednesday, JOLTS Job Openings improved to 5.79 million, easily beating the forecast of 5.67 million. Unemployment Claims followed suit with a strong reading. The indicator dropped to 264 thousand, compared to an estimate of 269 thousand. Significantly, this marked the lowest jobless report in six weeks. With the Federal Reserve mulling over a rate hike in the next few months, employment numbers will be especially significant, and any unexpected reading could result in volatility in the currency markets.

It’s been a good week for gold, which has climbed 4.3% against the US dollar. The metal has gained strength as hopes have faded that the Federal Reserve will raise interest rates at its policy meeting next week. Fed Chair Janet Yellen delivered a closely-watched speech on Monday, but the markets were disappointed with her lack of specifics. Speaking at the World Affairs Council in Philadelphia, Yellen said she remained optimistic about the US economy and hinted that the Fed would raise interest rates, but crucially, she gave no indication as to when that might occur. This omission was in sharp contrast to her remarks just over a week ago, when she declared that a hike would likely be appropriate “in the coming months”. Yellen played down the dismal Nonfarm Payroll report, saying that the markets shouldn’t attach too much significance to one soft report. The markets had lowered expectations for a June rate hike, and Yellen’s speech has all but priced out a June move. However, the Fed could well make a move in July or September. Any decision to maintain or raise rates in the coming months will be data-dependent, particularly on inflation and employment data.

XAU/USD Fundamentals

Thursday (June 9)

• 8:30 US Unemployment Claims. Estimate 269K. Actual 264K
• 10:00 US Wholesale Inventories. Estimate 0.1%. Actual 0.6%
• 10:30 US Natural Gas Storage. Estimate 80B. Actual 65B
• 13:01 US 30-year Bond Auction. Actual 2.48%

Upcoming Key Events

Friday (June 10)

• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 94.1 points

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Thursday, June 9, 2016

XAU/USD June 9 at 13:25 EDT

Open: 1264.80 Low: 1256.80 High: 1271.75 Close: 1269.88

XAU/USD Technical

• XAU/USD was flat in the Asian and European sessions. The pair has posted 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, 1207 and 1191
• Above: 1279, 1307 and 1331

OANDA’s Open Positions Ratio

XAU/USD ratio is showing gains in short positions on Thursday. This is consistent with continuing gains by XAU/USD, which has led to the covering of long positions. Currently, long positions maintain a strong majority (64%), indicative of trader bias towards XAU/USD continuing to climb 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.