Gold Steady As Markets Eye Nonfarm Payrolls

Gold is steady on Friday, as the spot price stands at $1254.87 per ounce in the European session. The markets are keeping a close eye on Nonfarm Payrolls, which will be released later on Friday. On Thursday, the ECB cut interest rates, although the reductions were not as deep as expected.

Mario Draghi and his colleagues finally pressed the trigger on Thursday, as the ECB lowered the benchmark interest rate for the first time since November 2013. The rate was lowered to 0.15%, less than expected by the markets, which had anticipated a cut to 0.10%. As well, the marginal lending rate was cut to 0.40% from 0.75% and the deposit facility rate to -0.10% from 0.0%. This is the first time that the ECB has cut deposit rates below 0%, the aim being to encourage banks to lend more funds to businesses rather than have to pay to park funds overnight with the central bank. Draghi opted not to implement a quantitative easing program, but did hint that further action was on the way if necessary.

In the US, the spotlight is on employment releases. On Wednesday, ADP Nonfarm Payrolls slipped to 179 thousand, well off the estimate of 217 thousand. Unemployment Claims were not sharp, rising to 312 thousand, up from 300 thousand in the previous reading. The estimate stood at 309 thousand. Nonfarm Payrolls will be released on later on Friday, and a weak reading could weigh on the US dollar. We’ll also get a look at the Unemployment Rate, with little change expected.

XAU/USD for Friday, June 6, 2014

XAU/USD June 6 at 9:20 GMT

XAU/USD 1254.87 H: 1256.874 L: 1252.80

XAU/USD Technical

• Gold is steady on Friday.
• 1250 has reverted to a support role. Next there is support at 1230.
• 1260 is the next resistance line. This is followed by resistance at 1275.
• Current range: 1250 to 1260.

Further levels in both directions:

• Below: 1250, 1230, 1200 and 1182
• Above: 1260, 1275, 1300, 1315

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to a gain in short positions on Friday. This is not consistent with what we are seeing from the pair, which is almost unchanged. The ratio is made up of a substantial majority of long positions, reflecting a strong trader bias towards gold breaking out and gaining ground against the US dollar.

Gold is showing very little movement. XAU/USD is unchanged in the European session.

XAU/USD Fundamentals

• 12:30 US Nonfarm Employment Change. Estimate 214K.
• 12:30 US Unemployment Rate. Estimate 6.4%.
• 12:30 US Average Hourly Earnings. Estimate 0.2%.
• 19:00 US Consumer Credit. Estimate 15.3B.

*Key releases are highlighted in bold

*All release times are GMT

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