Gold Close to $1070, Markets Eye ADP Nonfarm Payrolls

Gold is steady on Wednesday, as the metal trades at a spot price of $1067.30 in the European session. In the US, it’s a busy day on the event front, highlighted by ADP Nonfarm Employment Change. As well, Fed chair Janet Yellen makes a couple of appearances in Washington.

Gold prices have shown some improvement this week, but the base metal remains close to levels not seen since February 2010. November was a brutal month for the metal, which gave up about 7 percent of its value. With the markets eyeing a rate hike in December, and the US dollar continuing to pound its rivals, investors have had little reason to turn to gold. A rate hike is bearish for gold, since gold becomes less competitive with yield-bearing assets. So, the growing likelihood that we’ll see a rate hike later in December has been bad news for the precious metal.

In the US, this week’s employment numbers kick off with the ADP Nonfarm Payrolls. The markets are expecting the ADP release to improve to 191 thousand. On Thursday, we’ll get a look at Unemployment Claims, followed by the official NFP on Friday. With the markets abuzz over continuing speculation about a rate hike later in the month, these employment releases will be under the market microscope and could result in strong volatility on the currency markets.

US manufacturing data has been anything but impressive in recent readings, and this was underlined by a soft reading from ISM Manufacturing PMI on Tuesday. The key index slipped to 48.6 points in November. This figure fell short of the estimate of 50.6 points, and marked the first contraction from the index since May 2013. Manufacturing data in October was also soft – the Empire State Manufacturing Index posted a dismal reading of -10.7 points, worse than the estimate of -5.3 points. This marked a fourth straight decline by the important indicator. As well, Philly Fed Manufacturing Index posted a weak gain of 1.9 points. This negative trend points to trouble in the manufacturing sector and could weigh on the US dollar.

XAU/USD Fundamentals

Wednesday (Dec. 2)

• 1:00 US FOMC Member Lael Brainard Speaks
• 13:10 US FOMC Member Dennis Lockhart Speaks
• 13:15 ADP Nonfarm Employment Change. Estimate 191K
• 13:30 US Fed Chair Janet Yellen Speaks
• 13:30 US Revised Nonfarm Productivity. Estimate 2.2%
• 13:30 US Revised Unit Labor Costs. Estimate 1.1%
• 15:30 US Crude Oil Inventories. Estimate -0.6M
• 17:25 US Fed Chair Janet Yellen Speaks
• 19:00 US Beige Book
• 20:40 US FOMC Member John Williams Speaks

Upcoming Key Events

Thursday (Dec. 3)

• 13:30 US Unemployment Claims. Estimate 269K
• 15:00 US Fed Chair Janet Yellen Testifies
• 15:00 ISM Non-Manufacturing PMI. Estimate 58.1 points

*Key releases are highlighted in bold

*All release times are GMT

XAU/USD for Wednesday, December 2, 2015

XAU/USD December 2 at 12:45 GMT

XAU/USD 1067.30 H: 1070 L: 1067

XAU/USD Technical

• XAU/USD has showed little movement in the Asian and European sessions.
• 1080 is the first line of resistance.
• 1043 is providing support.
• Current range: 1043 to 1080

Further levels in both directions:

• Below: 1043, 1024 and 980
• Above: 1080, 1098, 1134 and 1151

OANDA’s Open Positions Ratio

XAU/USD ratio is showing little movement on Wednesday, indicative of the lack of movement from the pair. Long positions continue to make up a strong majority (70%), indicative of strong trader bias towards gold prices moving to higher levels.

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.