Gold continues to show little movement this week, with the spot price at $1251.18 per ounce in the European session on Tuesday. The precious metal has been listless for close to a week, and this lack of movement could continue on Tuesday, with no major events on the schedule. In the US, today’s highlight is JOLTS Job Openings.
The markets continue to digest the monetary moves taken by the ECB last week. Although the interest rate cuts were not drastic, they nonetheless represented firm action by the ECB, and Mario Draghi has stated that more action could follow if deemed necessary. Meanwhile, with the Federal Reserve continuing to trim its QE program, there is a strong likelihood that US rates will move upwards in 2015. This has led to a slide in EUR/USD this week, but XAU/USD has not been affected, so far.
In the US, employment numbers were solid late last week. Unemployment Claims and Nonfarm Payrolls, both key indicators, met market expectations. Unemployment Claims came in at 312 thousand, slightly above the estimate of 309 thousand. Nonfarm Employment Change met modest expectations on Friday, adding 217 thousand new jobs. The estimate stood at 214 thousand. The Unemployment Rate stayed pegged at 6.3%, beating the estimate of 6.4%.
The ECB’s rate cuts are a belated response to weak growth and low inflation in the Eurozone, but the markets had expected more. The cut in the benchmark rate was not as deep as anticipated, and many market players were looking for an asset purchase program, such as the schemes adopted by the Federal Reserve and Bank of England. The euro did drop as low as the 1.35 line following the ECB move, but recovered and is back at levels prior to the ECB announcement. It’s safe to say that the markets were underwhelmed by the ECB’s actions, with one analyst saying the ECB had fired a lot of small bullets rather than resorting to a bazooka.
XAU/USD for Tuesday, June 10, 2014
XAU/USD June 10 at 11:20 GMT
XAU/USD 1252.69 H: 1256.10 L: 1251.18
- Gold is listless on Tuesday, continuing the trend we’ve seen since last week.
- 1250 continues to provide support. 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 unchanged on Tuesday. This is 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 continues to show little movement. XAU/USD is unchanged in the European session.
- 11:30 US NFIB Small Business Index. Estimate 96.1 points.
- 14:00 US JOLTS Job Openings. Estimate 4.04M.
- 14:00 US Wholesale Inventories. Estimate 0.6%.
*Key releases are highlighted in bold
*All release times are GMT
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