Gold Steadies, Climbs Back to $1080

Gold prices have steadied on Wednesday, trading at a spot price of $1078.55 per ounce in the European session. Taking a look at economic news, the US will release Wholesale Inventories and Crude Oil Inventories. On Thursday, we’ll get a look at more job data, with the release of Unemployment Claims.

Gold posted strong gains late last week, taking advantage of the surprise ECB decision and a positive US NFP report. The metal moved higher after the ECB shocked the markets in its decision not to add further monetary stimulus to kick-start the ailing Eurozone economy. The markets had expected some significant monetary measures from Mario Draghi and company, but the head of the ECB played it safe, opting to do little more than tweak current monetary policy. The gold rally continued after the NFP report. The key indicator dropped to 211 thousand in November, much lower than the previous release of 271 thousand. Still, this was good enough to beat the estimate of 201 thousand. This indicator is often a market-mover, and the positive reading will lend support to Federal Reserve policymakers who are in favor of raising interest rates later this month.

Recent US job numbers have been positive, so a weak reading from JOLTS Jobs Openings came as a rude surprise to the markets. The important employment indicator slipped to 5.38 million, sharply lower than the previous month’s reading of 5.53 million. This soft figure was way off the estimate of 5.59 million. Still, one disappointing employment release is unlikely to deter the Federal Reserve from proceeding with an expected rate hike at the policy meeting on December 16. The US will release key data later in the week, including CPI and PPI. Persistently low inflation levels have weighed on the US economy and are well below the Fed target of 2 percent, and is a key reason why the Fed did not raise rates earlier this year. However, Yellen stated that she expects inflation numbers to improve, so weak inflation is unlikely to be an impediment to the FOMC approving a rate hike, which has not occurred in over nine years.

XAU/USD Fundamentals

Wednesday (Dec. 9)

  • 15:00 US Wholesale Inventories. Estimate 0.2%
  • 15:30 US Crude Oil Inventories. Estimate 0.7M
  • 18:01 US 10-year Bond Auction

Thursday (Dec. 10)

  • 13:30 US Unemployment Claims. Estimate 266K

*Key releases are highlighted in bold

*All release times are GMT

XAU/USD for Wednesday, December 9, 2015

Forex Rate Graph 21/1/13

XAU/USD December 9 at 12:20 GMT

XAU/USD 1078.55 H: 1081.46 L: 1073.19

XAU/USD Technical

S3 S2 S1 R1 R2 R3
980 1024 1043 1080 1098 1134
  • XAU/USD has shown limited movement in the Asian and European sessions
  •  1080 was tested in resistance earlier and is under strong pressure
  • 1043 has some breathing room in 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

In the XAU/USD ratio, long positions continue to command a solid majority (75%). This is 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.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.