XAU/USD – Gold Posts Strong Gains on Trump Fears

Gold has posted strong gains in the Wednesday session, continuing the gains which marked the Tuesday session. In North American trade, the metal is trading above the $1305.38, the first time it’s crossed above the $1300 level since October 4. On the release front, ADP Nonfarm Employment dropped to 147 thousand, well short of the estimate of 166 thousand. Later in the day, the Federal Reserve concludes its policy meeting and is expected to maintain the benchmark interest rate at 0.25 percent. On Thursday, the US releases unemployment claims and the ISM Non-manufacturing PMI.

The Federal Reserve is in the spotlight, as the bank concludes a 2-day policy meeting on Wednesday. The markets are expecting the Fed to remain on the sidelines, given that the US presidential election takes place next week. The rate statement will be carefully monitored, as analysts comb for hints about the extent of support among FOMC members ahead of the crucial December meeting. Traders should be prepared for some volatility in gold prices in the Wednesday North American session. A dovish stance message from the Fed could increase demand for gold and push prices higher. On the other hand, if the Fed hints that a December rate hike is on the way, we could see gold prices drop.

There was positive news from the US consumer front on Monday, as Personal Spending rebounded with a 0.5% gain in September, after a flat reading of 0.0% in August. Gold responded to the reading with slight losses. This release comes on the heels of a disappointing consumer spending report on Friday, as UoM Consumer Sentiment fell to 87.2 points in October, below expectations and dropping to its lowest level since August 2015.

XAU/USD Fundamentals

Wednesday (November 2)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 166K. Actual 147K
  • 10:30 US Crude Oil Inventories. Estimate 1.6M. Actual 14.4M
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <0.50%. Actual <0.50%

Upcoming Key Events

Thursday (November 3)

  • 8:30 US Unemployment Claims
  • 8:30 US ISM Non-manufacturing PMI. Estimate 56.2 points

*All release times are EDT

*Key events are in bold

XAU/USD for Wednesday, November 2, 2016

XAU/USD November 2 at 12:45 EDT

Open: 1287.72 High: 1306.06 Low: 1287.38 Close: 1305.38

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1245 1279 1290 1307 1331 1358
  • XAU/USD was flat in the Asian session. The pair has posted gains in the European and North American sessions
  • 1290 has switched to support following gains by XAU/USD
  • 1307 is under pressure in resistance and could break in the North American session
  • Current range: 1290 to 1307

Further levels in both directions:

  • Below: 1290, 1279, 1245 and 1223
  • Above: 1307, 1331 and 1358

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Wednesday session. Currently, long positions command a substantial majority (70%), indicative of trader bias towards XAU/USD continuing to move higher.

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.