Gold Close to $1200 After Huge Gains

Gold has posted slight losses on Tuesday, after posting sharp gains at the start of the week. In the European session, the spot price stands at $1194.33. In the US, there are no major releases on the calendar. Federal Reserve Chair Janet Yellen will speak at an event in Washington.

Gold prices have taken traders on a roller coaster ride in the past few days. On Sunday, gold dropped sharply after 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 to $1142 per ounce early on Monday, but reversed directions and has posted huge gains, climbing close to 5% on the day. Still, the long-term range for gold remains bearish, as the US economy strengthens and the markets prepare for a rate hike in 2015.

The US manufacturing sector continues to expand, as ISM Manufacturing PMI remained strong in November. The index came in at 58.7 points, close to the previous release of 59.0 points, which marked a three-year high. The positive US manufacturing data stands in sharp contrast to the situation in the Eurozone and China. In the Eurozone, manufacturing PMIs in France, Germany and Italy contracted in November. In China, the world’s second largest economy, Manufacturing PMI edged down to 50.3 points, down from the previous reading of 50.8 points.

XAU/USD for Tuesday, December 2, 2014

XAU/USD December 2 at 10:30 GMT

XAU/USD 1194.33 H: 1210.70 L: 1192.43

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1130 1156 1175 1200 1215 1240

 

  • XAU/USD was flat in the Asian session. The pair broke below support at 1205 in the European session.
  • 1175 is a strong support level.
  • The round number of 1200 was breached earlier and has reverted to a resistance role.
  • Current range: 1175 to 1200.

Further levels in both directions:

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

 

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged on Tuesday, continuing the lack of movement which has characterized the ratio since late last week. This is not consistent with the pair’s movement, as gold has posted slight losses. The ratio is evenly split between long and short positions, indicative of a lack of trader bias as to which direction gold is headed.

XAU/USD Fundamentals

  • 13:10 US FOMC Member Stanley Fischer Speaks.
  • 13:30 US Fed Chair Janet Yellen Speaks.
  • 15:00 US Construction Spending. Estimate 0.6%.
  • All Day – US Total Vehicle Sales. Estimate 16.6M.
  • 17:00 US FOMC Member Lael Brainard 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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
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.