XAU/USD – Gold Dips as US Jobless Claims Shine

Gold has recorded slight losses on Thursday, as the metal trades at a spot price of $1335.89 per ounce in the North American session. On the release front, unemployment claims dropped to 259 thousand, beating the estimate of 264 thousand. This reading marked the lowest level of jobless claims in seven weeks. There was another significant release on Thursday, as Crude Oil Inventories shocked the markets, posting a huge decline of 14.5 million barrels.

At a meeting of central bankers back last month, Fed chair Janet Yellen said that the case in favor of a rate hike had improved, given stronger US data. Ever since that speech, the markets have been fixated on the possibility of a rate hike prior to the end of 2016. However, a spate of weak US numbers in the past week has lowered the likelihood of a move by the Fed. This has been great news for gold, which is closely linked to changes in interest rates. Gold climbed close to $1350 earlier this week in response to a dismal reading from ISM Non-Manufacturing PMI, which fell to a six-year low. The CME FedWatch Tool is showing a substantial drop in the odds of a rate hike for both September and December – the likelihood of a September rise has dropped to 15%, while the odds of a December hike are down to 39%. Even though the US labor market remains close to full capacity, many FOMC members remain uneasy about a rate hike, especially given the persistent lack of inflation in the economy. Key inflation indicators will be released in mid-September, just before the Fed policy meeting on September 21. These releases could play a critical role in determining if the Fed presses the rate trigger this month, or decides to revisit the rate question in December, exactly a year from the last rate hike.

 

XAU/USD Fundamentals

Thursday (September 8)

  • 8:30 US Unemployment Claims. Estimate 264K. Actual 259K
  • 10:30 US Natural Gas Storage. Estimate 44B. Actual 36B
  • 11:00 US Crude Oil Inventories. Estimate +0.6M. Actual -14.5M
  • 15:00 US Consumer Credit. Estimate 15.7B

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Thursday, September 8, 2016

XAU/USD September 8 at 13:05 EDT

Open: 1344.43 High: 1349.40 Low: 1335.09 Close: 1335.89

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1279 1307 1331 1361 1388 1416
  • XAU/USD was flat in the Asian and European sessions. The pair has posted losses in North American trade
  • 1331 has weakened in support following losses by XAU/USD in the Thursday session
  • 1361 is a strong resistance line
  • Current range: 1331 to 1361

Further levels in both directions:

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

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to slight gains in long positions. Currently, long positions have a sizable majority (61%), indicative of trader bias towards XAU/USD reversing directions and moving 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.