XAU/USD – Gold Continues to Rise as Markets Pause for Labor Day

Gold has posted slight gains on Monday, as the metal trades at a spot price of $1327.10 per ounce in the North American session. On the release front, there are no US events on the schedule, as US markets are closed for Labor Day. On Tuesday, the US will publish the ISM Non-manufacturing PMI.

Soft employment numbers on Friday translated into gains for gold, which hit a high of $1330, before closing the week at $1324. Nonfarm Payrolls plunged to 151 thousand in August, down from 255 thousand a month earlier. Wage growth also disappointed, as Average Hourly Earnings edged lower to o.1%, shy of the forecast of 0.2%. Clearly this was not positive news, but August job data is often unreliable and tends to miss market forecasts. Will the Fed also give a “free pass” and ignore the weak job data? The markets apparently think so, as the odds of a rate hike this year are about the same after the payrolls report – the  the likelihood of a September hike is 27 percent, while a December increase is pegged at 60 percent. Still, even if the August payrolls release is overlooked, the Fed will find it hard to justify a rate increase strictly based on a robust job market. Stronger inflation numbers for August, for example, would make a rate hike an easier sell to Fed members who remain uneasy about raising rates. Key inflation indicators will be released in mid-September, just before the Fed policy meeting on September 21. Since gold prices are sensitive to moves in interest rates, we can expect a busy few weeks from gold leading up to the Federal Reserve’s rate decision later this month.

XAU/USD Fundamentals

Monday (September 5)

  • There are no US events on the schedule

Tuesday (September 6)

  • 10:00 US ISM Non-Manufacturing PMI. Estimate 55.4

*Key releases are highlighted in bold

*All release times are EDT

 

XAU/USD for Monday, September 5, 2016

XAU/USD September 5 at 13:50 EDT

Open: 1322.74 High: 1328.61 Low: 1321.80 Close: 1327.10

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1245 1279 1307 1331 1361 1388
  • XAU/USD posted small gains in the Asian and European sessions. The pair is flat in North American trade
  • There is weak resistance at 1331
  • 1307 is providing support
  • Current range: 1307 to 1331

Further levels in both directions:

  • Below: 1307, 1279 and 1245
  • Above: 1331, 1361, 1388 and 1416

OANDA’s Open Positions Ratio

XAU/USD ratio is showing long positions with a strong majority (66%), indicative of trader bias towards XAU/USD continuing to move upwards. 

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.