Gold Slips After Swiss Referendum But Recovers

Gold has posted strong gains on Monday, after dropping sharply earlier in the day. The metal took a hit as Swiss voters rejected a referendum which would have required the Swiss National Bank to purchase large amounts of gold. In the European session, the spot price stands at $1173 per ounce. On the release front, it’s a quiet day, highlighted by ISM Manufacturing PMI.

Gold traders were keeping a close eye on Switzerland over the weekend, as Swiss voters rejected a proposal to boost the Swiss National Bank’s gold reserves. Had the motion passed, the SNB would have been required to purchase some 1500 metric tons of gold over five years. Gold prices sank in early in the Asian session, dropping to $1142 per ounce, a 3-week low. However, the metal reversed directions and has posted strong gains in the European session. Although the metal managed to recover from the Swiss scare, with inflation remaining at weak levels and oil prices softening, we could see gold resume its downward trend.

Ahead of the Thanksgiving holiday, the US released a batch of data on Wednesday and the numbers left little to cheer about. Unemployment Claims jumped to 313 thousand, its highest level since mid-September. Core Durable Goods Orders declined 0.9%, its third decline in four readings. The estimate stood at 0.5%. New Home Sales fell to a 3-month low, dropping to 458 thousand. This was short of the estimate of 471 thousand. Pending Home Sales was no better, declining by 1.1%, well off the estimate of 0.9%. There was better news from UoM Consumer Sentiment, which posted a fourth straight gain, rising to 88.8 points. However, this was short of the estimate of 90.2 points. Despite the weak numbers, market sentiment towards the US economy remains high.

XAU/USD for Monday, December 1, 2014

XAU/USD December 1 at 11:20 GMT

XAU/USD 1173.13 H: 1184.20 L: 1146.68

XAU/USD Technical

• XAU/USD lost ground in the Asian session but then recovered, breaking above resistance at 1156. The pair has posted strong gains in European trade.
• 1156 is the next support level.
• 1175 was tested as gold climbed sharply and remains under strong pressure. 1200 is stronger.
• Current range: 1156 to 1175.

Further levels in both directions:

• Below: 1156, 1130 and 1111 and 1073
• Above: 1175, 1200, 1215, 1240, 1255 and 1275

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged on Monday, continuing the lack of movement seen on Friday. This is not consistent with the pair’s movement, as gold has posted strong gains. The pair has a slight majority of long positions, indicative of trader bias towards gold continuing to move higher.

XAU/USD Fundamentals

• 14:45 US Final Manufacturing PMI. Estimate 55.0 points.
• 15:00 US ISM Manufacturing PMI. Estimate 57.9 points.
• 15:00 US Manufacturing Prices. Estimate 52.6 points.
• 17:15 US FOMC Member William Dudley Speaks.
• 18:00 US FOMC Member Stanley Fischer Speaks.

*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.