Gold on Hold Ahead of ECB Statement, US Jobless Claims

Gold is flat on Thursday, as the spot price stands at $1201.10 in the European session. On the release front, today’s highlight is the ECB rate announcement. In the US, the major event of the day is Unemployment Claims, with the markets expecting a improvement from the previous reading. We’ll get a look at additional job data on Friday, with the release of Nonfarm Payrolls.

The ECB has cut interest rates to the bone and implemented asset purchases, but these measures have done little to boost weak growth and inflation levels in the Eurozone. There is strong pressure on ECB head Mario Draghi to take additional measures, such as quantitative easing (QE), which was used successfully by the US Federal Reserve to help boost the economy. However, there is resistance to QE from some quarters, such as the German central bank, so it’s unlikely that Draghi will make such a drastic move at this time. Still, if the ECB issues pessimistic forecasts about the economy in today’s rate statement or press conference, we could see the euro lose ground.

Gold prices took traders on a roller coaster ride early in the week. 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 quickly recovered and remain close to the 1200 level. Still, the long-term range for gold remains bearish, as the US economy strengthens and the markets prepare for a rate hike in 2015.

US jobless claims did not impress on Wednesday, as ADP Nonfarm Employment Change fell to 208 thousand, down from 230 thousand in the previous release. This was well short of the estimate of 223 thousand. We’ll get a look at the official Nonfarm Employment Change report on Friday, with the markets expecting a strong reading of 231 thousand. Will the indicator meet or beat expectations?

XAU/USD for Thursday, December 4, 2014

XAU/USD December 4 at 11:20 GMT

XAU/USD 1202.72 H: 1209.96 L: 1201.26

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1156 1175 1200 1215 1240 1255

 

  • XAU/USD has shown very little movement in the Asian and European sessions. The pair continues to trade close to the key 1200 line.
  • 1200 remains fluid and could see more action during the day. It is currently a weak support level. 1175 is stronger.
  • 1215 is an immediate resistance line. 1240 is next.
  • Current range: 1200 to 1215.

Further levels in both directions:

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

 

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in short positions on Thursday. This is consistent with the pair’s movement, as gold has posted very small losses. The ratio is evenly split between long and short positions, indicative of a lack of trader bias towards what direction gold will take next.

XAU/USD Fundamentals

  • 00:30 US FOMC Member Richard Fisher Speaks.
  • 12:30 US Challenger Job Cuts.
  • 12:45 ECB Minimum Bid Rate. Estimate 0.05%.
  • 13:30 ECB Press Conference.
  • 13:30 US Unemployment Claims. Estimate 296K.
  • 13:30 US FOMC Member Loretta Mester Speaks.
  • 15:30 US Natural Gas Storage. Estimate -51B.
  • 17:30 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.