Gold Rally Continues as Jobless Claims Jump

Gold has posted gains for a second straight day. In Thursday’s North American trade, the spot price for an ounce of gold is $1286.73, up 0.42% on the day. On the release front, unemployment claims climbed to 239 thousand, missing the estimate of 232 thousand. On Friday, the US publishes Preliminary UoM Consumer Sentiment.

Unemployment Claims were a disappointment at 239 thousand, climbing to a 4-week high. Investor sentiment will not fall after one soft employment report, but there are some concerns with the US labor market. Nonfarm payrolls rebounded in October with a gain of 261 thousand, after a rare decline a month earlier. Still, this reading was well off the forecast of 312 thousand. Wage growth remains a problem, reflective of chronically low inflation. In October, Average Hourly Earnings posted a flat 0.0%, the first time wages have not increased since November 2016.

After failing to pass a new healthcare act, President Trump has his sights set on tax reform, a key item in his domestic platform. Trump wants Congress to pass legislation overhauling the tax code before the end of the year, but that could prove to be too tight of a deadline. Most Democrats have come out against the proposal, and not all Republicans are on board. The bill would cut corporate taxes from 35% to 20%, but predictably, Democrat and Republican lawmakers are at odds as to whether the bill will lower taxes for the middle class. The bill is presently being debated in a congressional committee and is expected to move to the House floor next week. The Senate will present its version of the bill on Thursday, so we can expect plenty of activity in Congress in the next few weeks. Expectations that Trump will cut taxes has been the catalyst for a stock market rally over the past year, and if Trump succeeds in overhauling the tax code, investor risk appetite could soar and weigh on gold prices.

 

XAU/USD Fundamentals

Thursday (November 9)

  • 8:30 US Unemployment Claims. Estimate 232K. Actual 239K
  • 10:00 US Final Wholesales Inventories. Estimate 0.3%. Actual 0.3%
  • 10:30 US Natural Gas Storage. Estimate 15B. Actual 15B
  • 13:01 US 30-year Bond Auction

Friday (November 10)

  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 100.8

*All release times are GMT

*Key events are in bold

 

XAU/USD for Thursday, November 9, 2017

XAU/USD November 9 at 12:30 EST

Open: 1281.54 High: 1288.29 Low: 1280.05 Close: 1286.73

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1213 1240 1260 1285 1307 1337
  • XAU/USD edged higher in the Asian and European sessions. The pair is showing limited movement in North American trade
  • 1260 is providing support
  • 1285 is under pressure in resistance
  • Current range: 1260 to 1285

Further levels in both directions:

  • Below: 1260, 1240 and 1213
  • Above: 1285, 1307, 1337 and 1367

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Thursday session. Currently, long positions have a majority (72%), indicative of trader bias towards XAU/USD reversing directions and moving towards higher ground.

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.