Gold Slips as Factory Orders Beats Estimate

Gold has started the week with losses, erasing the gains seen in the Friday session. In the Monday North American session, the spot price for an ounce of gold is $ 1274.23, down 0.50% on the day. In the US, Factory Orders declined 0.1%, the first decline since July. Still, this beat the forecast of -0.3%. On Tuesday, the US publishes ISM Non-Manufacturing PMI, with the markets expecting the indicator to slow to 59.2 points.

President Trump has been pressing for a major legislative win before the end of the year, and it looks like he’ll get tax reform all wrapped up in time for Christmas. The Republicans have pushed through tax legislation through the House and the Senate at breakneck speed. After a false start on Friday, the US Senate passed a tax reform bill on the weekend. The 51-49 vote was a squeaker, with 51 Republicans voting yes, against 48 Democrats and 1 Republican. Republican lawmakers hope to have Trump sign a bill before the end of the year. The Senate and House must now reconcile their two bills, and the new uniform bill will then have be passed in both houses. Investors are pleased with the bill, and the US dollar has responded to the vote with broad gains.

Gold could be marked by volatility in the upcoming weeks. Gold prices are inversely linked to interest rate hikes, and with the markets widely expecting rate hikes in December and January, traders should be prepared for some movement from gold. As well, there are major changes taking place at the Federal Reserve, as Jerome Powell is set to replace Janet Yellen as Fed chair in February. Powell didn’t make any waves at his confirmation hearing last week, although his comments on relaxing regulations for smaller banks did send global stock markets higher. Powell inherits a strong US economy, and this could mean several rate hikes in 2018, if the economy maintains its current pace. Still, inflation remains stubbornly low, and with Fed policymakers divided on whether to keep the 2 percent inflation target, the markets will be keeping close tabs on how Powell deals with inflation when he takes over the helm of the Fed.

XAU/USD Fundamentals

Monday (December 4)

  • 10:00 US Factory Orders. Estimate -0.3%. Actual -0.1%

Tuesday (December 5)

  • 10:00 US ISM Non-Manufacturing PMI. Estimate 59.2

*All release times are GMT

*Key events are in bold

XAU/USD for Monday, December 4, 2017

XAU/USD December 4 at 12:05 EST

Open: 1280.64 High: 1280.64 Low: 1271.20 Close: 1274.23

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1213 1240 1260 1285 1307 1337
  • XAU/USD posted slight losses in the Asian session. The pair has been flat in the European and North American sessions
  • 1260 is providing support
  • 1285 is the next resistance line
  • 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

In the Monday session, XAU/USD ratio is showing long positions with a majority (72%). This is indicative of trader bias towards XAU/USD reversing directions and moving to 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.