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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

S3 S2 S1 R1 R2 R3
1111 1130 1156 1175 1200 1215


Further levels in both directions:


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

*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 [4]

Currency Analyst at Market Pulse [5]
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.