Gold Calm At Start of Week

Gold is showing little movement on Monday, as the spot price per ounce stands at $1231.50. On Sunday, the ECB released the results of its stress tests of European banks and the results were considered positive overall. In the US, today’s highlight is Pending Home Sales. The markets are expecting a strong improvement, with an estimate of 1.1%.

On Sunday, the ECB released the results of its stress tests of European banks. The exercise marked a comprehensive and rigorous review of the health of 130 European banks. No German or French banks failed the test, but the third largest Italian lender, Banca Monte Paschi, posted a capital shortfall and will have to explain to the ECB how its plans to eliminate the shortfall. The ECB is trying to restore confidence in the European banking sector and encourage more borrowing and spending on the part of consumers and businesses.

In the US, last week’s jobless numbers were softer than expected. Unemployment Claims rose to 284 thousand, much higher than the previous reading of 264 thousand, and above the estimate of 269 thousand. However, the markets were not overly concerned, as the four-week average, which is less volatile than the weekly release, dipped to 281,000, a 14-year low. Meanwhile, weak inflation levels continue to point to slack in the economy. On Wednesday, this trend continued with soft consumer inflation numbers. CPI and Core CPI both posted small gains of 0.1%.

 

XAU/USD for Monday, October 27, 2014

XAU/USD October 27 at 12:10 GMT

XAU/USD 1231.50 H: 1231.98 L: 1228.06

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1180 1200 1215 1240 1252 1275

 

  • Gold has been steady in the Asian and European sessions.
  • 1240 is an immediate resistance line. 1252 is stronger.
  • 1215 is the next support level.
  • Current range: 1215 to 1240.

Further levels in both directions:

  • Below: 1215, 1200, 1156 and 1111
  • Above: 1240, 1252, 1275, 1300 and 1322

 

OANDA’s Open Positions Ratio

XAU/USD ratio is almost unchanged on Monday. This is consistent with the limited movement we’re seeing from the pair. The ratio has a majority of long positions, indicative of trader sentiment in favor of gold breaking out and moving higher.

 

XAU/USD Fundamentals

  •  13:45 US Flash Services PMI. Estimate 57.9 points.
  • 14:00 US Pending Home Sales. Estimate 1.1%.

*Key releases are highlighted in bold

*All release times are GMT

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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.