XAU/USD – Gold Climbs as Dollar Dips in Thin Holiday Trade

Gold has posted strong gains in the Thursday session. In North American trade, the spot price for one ounce is $1156.00. It’s another quiet day on the release front. Unemployment claims, the final major indicator of 2016, dropped to 265 thousand, easily beating the forecast of 277 thousand.

Gold prices have climbed 1.2% on Thursday, the strongest 1-day gain we’ve seen since late September. With the stock markets and US dollar pulling back in low-volume trading, the metal has taken advantage and climbed closed to the $1160 level, marking a 2-week high. Still, gold is down in the month of December, and the metal has suffered a dismal fourth quarter. Even with Thursday’s gains, gold has slipped 12 percent since October 1. There could be more trouble ahead for gold, as strong economic growth could lead to further interest rate hikes in early 2017, which would push gold prices lower.

A strong US economy has boosted confidence levels among US consumers, in what analysts are describing as a post-election surge in optimism. Recent consumer confidence surveys are pointing upwards, as the US consumer is optimistic that economic conditions will continue to improve under the incoming Trump administration. The CB Consumer Confidence report surged in December to 113.7, its highest level since August 2001. This reading comes on the heels of UoM Consumer Sentiment, which climbed to a 12-year high, with a reading of 93.8 points. Both of these well-respected surveys found that consumers are confident that continuing economic growth will create new jobs and raise incomes. Trump’s economic platform remains short on details, but he has promised to cut taxes while increasing public spending. If Trump manages to implement both of these goals, the US economy could heat up and also help global growth pick up speed.

XAU/USD Fundamentals

Thursday (December 29)

  • 8:30 US Unemployment Claims. Estimate 277K. Actual 265K
  • 8:30 US Goods Trade Balance. Estimate -61.5B. Actual -65.3B
  • 8:30 US Preliminary Wholesale Inventories. Estimate 0.1%. Actual 0.9%
  • 10:30 US Natural Gas Storage. Estimate -219B. Actual -237B
  • 11:00 US Crude Oil Inventories. Estimate -1.3M. Actual +0.6M

*All release times are EST

*Key events are in bold

XAU/USD for Thursday, December 29, 2016

XAU/USD December 29 at 12:35 EST

Open: 1142.34 High: 1159.55 Low: 1142.31 Close: 1156.00

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1111 1130 1146 1174 1199 1232
  • XAU/USD posted small gains in the Asian session. The pair was flat in the European session and has posted strong gains in North American trade
  • 1146 has switched to a support role following strong gains by XAU/USD
  • 1174 is the next resistance line
  • Current range: 1130 to 1146

Further levels in both directions:

  • Below: 1146, 1130, 1111 and 1076
  • Above: 1174, 1199 and 1232

OANDA’s Open Positions Ratio

XAU/USD ratio remains unchanged in the Thursday session. Currently, long positions command a substantial majority (78%). This is 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.

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.