Gold Stays Soft After Macron Election Victory

Gold has started the week with slight losses. In the North American session, the pair is trading at $1227.14. On the release front, there are no major US events on the schedule. On Sunday, Emmanuel Macron cruised to victory and won the French presidential election.

There were no major surprises in Sunday’s French election, as Emmanuel Macron easily won the presidential race. Macron won 64 percent of the popular vote, with Marie Le Pen taking 36 percent. Macron’s margin of victory was larger than the polls predicted, and investor appetite for risk increased, sending gold to lower levels. Although Macron certainly “won big”, it should be noted that fully one third of French voters either abstained or voted a blank ballot as a protest vote. This means that Macron was viewed by many voters as a default choice, given that his opponent was the leader of the far-right and has been accused of being racist and xenophobic. The French elections now enter a new phase, with parliamentary elections slated for mid-June. Macron’s En Marche! party is barely a year old and is unlikely to win a majority, which would mean a power-sharing setup in parliament, likely between Macron’s party and the center-right. Similar to the presidential election, the parliamentary election is full of uncertainty, and opinion polls during the election campaign will be important as fundamental releases and should be treated as market-movers.

French Election Timeline

May 7 – Emmanuel Macron wins second round of French presidential elections

May 11 – Official proclamation of President Emmanuel Macron

May 14 – [from midnight] End of Francois Hollande’s mandate

June 11 – First round of legislative elections

June 18 – Second round of legislative elections

US employment numbers were generally strong on Friday. Nonfarm Payrolls improved to 211 thousand, easily beating the forecast of 194 thousand. The unemployment rate fell to an impressive 4.4%, compared to the estimate of 4.6%. This was the lowest rate since May 2007. The news was not as positive from wage growth remained weak at 0.3%, matching the forecast. Still, with such little slack in the labor markets, we should see wage growth start to move higher. If that happens sooner rather than later, the Fed will have to reconsider a third rate hike in 2017. As things stand now, two more moves is the likely scenario. The positive job numbers have cemented a rate hike in June, as the odds of hike are up to 83%, according to the CME Group.

XAU/USD Fundamentals

Sunday ( May 7)

  • French Presidential Election

Monday (May 8)

  • 10:05 US Labor Market Conditions Index. Actual 3.5

*All release times are EDT

*Key events are in bold

XAU/USD for Monday, May 8, 2017

XAU/USD May 8 at 13:50 EST

Open: 1234.63 High: 1236.56 Low: 1227.01 Close: 1227.14

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1146 1175 1199 1232 1260 1285
  • XAU/USD edged lower in the Asian session. The pair was flat in the European session and has posted slight losses in North American trade
  • 1199 is providing support
  • 1232 was tested earlier in resistance and is a weak line
  • Current range: 1199 to 1232

Further levels in both directions:

  • Below: 1199, 1175 and 1146
  • Above: 1232, 1260, 1285 and 1307

OANDA’s Open Positions Ratio

In the Monday session, XAU/USD ratio have a strong majority (71%). 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.