Gold is stable on Thursday, with the metal trading at a spot price of $1206.65 per ounce in the European session. In the US, today’s highlight is Unemployment Claims, with an estimate of 291 thousand. The US will release more employment data on Friday, with the publication of Nonfarm Payrolls and the unemployment rate.
Eurozone inflation numbers remained mired at low levels in key December reports. Eurozone CPI dipped to -0.2%, its first decline in over five years. German CPI wasn’t much stronger, coming in at 0.0% for the second straight month. The readings come at a crucial time, with the ECB holding a policy meeting on January 22. With the threat of deflation hanging over the Eurozone like a dark cloud, the ECB could respond with quantitative easing, which would mean buying large amounts of Eurozone bonds. QE worked well in the US, but the Federal Reserve was calling the shots and was able to implement and then taper QE as it pleased. It’s a far different story in Europe, as the powerful German Bundesbank has voiced its opposition to such a move and ECB head Mario Draghi will find it difficult to take such a dramatic step without a strong consensus. If the ECB does pull the ECB trigger, the shaky euro is likely to fall even further early in 2015.
The Federal Reserve released the minutes of its previous meeting, with no surprises for the markets. There was a lot of speculation that the insertion of the word “patience” in the previous policy statement signaled a more aggressive monetary stance. However, the minutes said that Fed members remained of the view that Fed policy had not changed, and that a rate hike would not occur before April. The markets are expecting a rate hike sometimes in 2015, but it’s hard to be any more precise. Although economic growth continues to improve, inflation remains at very low levels, which means that the economy is in no danger of overheating, so there is no immediate need for a rate increase.
XAU/USD for Thursday, January 8, 2015
XAU/USD January 8 at 12:00 GMT
XAU/USD 1206.65 H: 1214.25 L: 1204.58
- XAU/USD is showing limited movement on Thursday. The pair touched a high of 1214.25 in the Asian session, putting strong pressure on the 1215 line.
- 1200 is a weak support line. 1175 is stronger.
- On the upside, 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 losses in short positions on Thursday. This is consistent with the movement shown by the pair, as gold has posted small losses. The ratio remains close to a split between open and short positions, indicating a lack of trader bias as to what direction the pair will take next.
- 12:30 US Challenger Job Cuts.
- 13:30 US Unemployment Claims. Estimate 291K.
- 15:30 US Natural Gas Storage. Estimate -120B.
- 20:00 US Consumer Credit. Estimate 15.1B.
*Key releases are highlighted in bold
*All release times are GMT
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