XAU/USD – Gold Drops to 9-month Lows on Sharp ADP Nonfarm Payrolls

Gold has posted considerable losses in the Wednesday session, dropping 1.2 percent. In North American trade, the spot price for one ounce of gold is $1174.05. On the release front, ADP Nonfarm Employment Change jumped to 216 thousand, well above the forecast of 161 thousand. On Thursday, the US releases unemployment claims and the ISM Manufacturing PMI.

It’s been a dismal November for gold, as the metal has dropped 8.0 percent this month, its sharpest monthly decline since June 2013. A strong US economy has increased the appetite for risk, reducing demand for the safe-haven metal. As well, the expected rate hike in December is weighing on gold prices. Currently, the metal is trading at its lowest levels since early February.

US indicators impressed on Tuesday. Preliminary GDP sparkled in the third quarter, as the economy expanded 3.2%, above the forecast of 3.0%. The 3.2% gain was an upwards revision of Advance GDP, which came in at 2.9%. Solid consumer confidence numbers have been a critical factor in the US recovery, as an optimistic consumer is likely to go out and spend money. CB Consumer Confidence jumped to 107.1 points in November, surpassing the 100-level for the third time in four months. Last week, UoM Consumer Sentiment jumped to 93.8 points, its highest level since May. Donald Trump’s surprise election victory has not had an adverse effect on consumer confidence, and if these rosy numbers translate into stronger consumer spending, the US dollar could continue to climb against its rivals.

US Q3 GDP Revised Upward on Consumer Spending

XAU/USD Fundamentals

Wednesday (November 30)

  • All Day – OPEC Meetings
  • 8:15 US ADP Nonfarm Employment Change. Estimate 161K. Actual 216K
  • 8:30 US Core PCE Price Index. Estimate 0.1%
  • 8:30 US Personal Spending. Estimate 0.5%
  • 8:30 US Personal Income. Estimate 0.4%
  • 9:45 US Chicago PMI. Estimate 52.1
  • 10:00 US Pending Home Sales. Estimate 0.3%
  • 10:30 US Crude Oil Inventories. Estimate 0.7M
  • 11:45 US FOMC Member Jerome Powell Speech
  • 14:00 US Beige Book

Upcoming Key Events

Thursday (December 1)

  • 8:30 US Unemployment Claims. Estimate 252K
  • 10:00 US ISM Manufacturing PMI. Estimate 52.1

*All release times are EST

*Key events are in bold

XAU/USD for Wednesday, November 30, 2016

XAU/USD November 29 at 11:55 EST

Open: 1188.78 High: 1194.95 Low: 1170.28 Close: 1171.65

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1111 1130 1146 1174 1205 1223
  • XAU/USD was flat in the Asian session. The pair has posted losses in the European and North American sessions
  • 1146 is providing support
  • 1174 has switched to resistance following losses by XAU/USD
  • Current range: 1146 to 1174

Further levels in both directions:

  • Below: 1146, 1130 and 1111
  • Above: 1174, 1205, 1223 and 1245

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged this week. Currently, long positions have a substantial majority (77%). This is indicative of trader bias towards XAU/USD reversing directions and moving 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.