Gold Loses Ground as ADP Payrolls Report Soars

Gold has posted losses in the Wednesday session. In North American trade, gold is trading at $1246.12 per ounce. On the release front, the ADP Employment Change jumped to 263 thousand, crushing the forecast of 184 thousand. ISM Non-Manufacturing PMI dropped to 55.2, short of the forecast of 57.0 points. Later in the day, the Federal Reserve will release the minutes of its March policy meeting. On Thursday, the US releases the weekly unemployment claims report.

The Federal Reserve will be back on center stage on Wednesday, as it releases the minutes of its March policy meeting. At the meeting, the Fed raised rates by a quarter-point, to a range of 0.75%-1.00%. The markets will be paying close attention to the minutes, looking for hints about the timing of the next hike, as well as the tone of the minutes. The markets considered the rate statement overly cautious, and this sentiment sent the US dollar broadly lower in March. If the reaction to the minutes is one of disappointment, the dollar could again experience broad losses.

With the US economy continuing to perform well, the discussions around the monetary policy tables are not whether the Fed will raise rates, but how many hikes we will see in 2017. There is speculation about whether the Fed will hike rates two more times or three more times, and Fed policymakers seemed divided on this question. Last week, FOMC member called for three more hikes, saying the Fed should raise rates in June, September and December. Rosengren said that employment and inflation levels were close to the Fed’s targets, and that three additional hikes were needed in order to prevent the US economy from overheating. However, a majority of FOMC members are in favor of just two more hikes this year.

Gold Lower Despite Lower ISM Non-Manufacturing Index

 

XAU/USD Fundamentals

Wednesday (April 5)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 184K. Actual 263K
  • 9:45 US Final Services PMI. Estimate 53.1. Actual 52.8
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 57.0. Actual 55.2
  • 10:30 US Crude Oil Inventories. Estimate -0.1M. Actual 1.6M
  • 14:00 US FOMC Meeting Minutes

Thursday (April 6)

  • 8:30 US Unemployment Claims. Actual 251K

*All release times are GMT

*Key events are in bold

 

XAU/USD for Wednesday, April 5, 2017

XAU/USD April 5 at 13:00 EST

Open: 1255.45 High: 1257.40 Low: 1243.73 Close: 1246.12

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1174 1199 1232 1260 1285 1307
  • XAU/USD was flat in the Asian session. The pair has posted slight losses in both the European and North American sessions
  • 1232 is providing support
  • 1260 is the next resistance line
  • Current range: 1232 to 1260

Further levels in both directions:

  • Below: 1232, 1199, 1174 and 1146
  • Above: 1260, 1285 and 1307

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Wednesday session. Currently, long positions have a majority (55%), indicative of trader bias towards XAU/USD reversing directions and moving 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.