Gold Stays Close to $1100, US Jobless Claims Jumps

Gold prices are steady on Thursday, trading at $1095.75 an ounce in the North American session.  On the release front, Unemployment Claims jumped to an 11-month high. The Philly Fed Manufacturing Index also declined to -3.5 points, but beat the estimate. Crude Oil Inventories jumped to 4.0 million last week, beating the forecast of 3.3 million.

US employment numbers missed expectations on Thursday, coming on the heels of weak CPI numbers. Unemployment Claims jumped to 293 thousand, close to the symbolic 300-thousand level, and much higher than the estimate of 279 thousand. This was the key indicator’s highest level since February 2015, and will likely dampen enthusiasm for a rate hike in March. Federal Reserve members have expressed concern about weak inflation levels, and poor CPI numbers in December will not help the case to raise rates for a second time, following the historic rate hike in December. The Fed will hold its monthly policy meeting next week, and although the Fed statement may provide some clues about future monetary policy, it’s very unlikely that the Fed will raise rates at the January meeting.

Gold has surged 4.0 percent in the month of January, as jittery investors have shunned risky assets in favor of safe-haven assets like gold. The markets have nervously watched as China, the world’s second largest economy, continues to show signs of slowdown. Chinese GDP for the fourth quarter showed another drop, as the key indicator dipped to 6.8%, shy of the forecast of 6.9%. Chinese annual GDP for 2015 came in at 6.9%, the weakest gain in 25 years. A softer Chinese economy and plunging oil prices are having major repercussions in the global stock markets and currency markets, and this has spelled good news for the shiny metal.

XAU/USD Fundamentals

Thursday (Jan. 21)

• 8:30 US Philly Fed Manufacturing Index. Estimate -5.8 points. Actual -3.5 points
• 8:30 US Unemployment Claims. Estimate 279K. Actual 293K
• 10:30 US Natural Gas Storage. Estimate -180B. Actual 178B
• 11:00 US Crude Oil Inventories. Estimate 3.3M. Actual 4.0M

*All release times are EST

*Key events are in bold

XAU/USD for Thursday, January 21, 2016

XAU/USD January 21 at 12:20 GMT

Open: 1099.48 Low: 1092.45 High: 1104.55 Close: 1095.75

XAU/USD Technical

• 1080 is providing support
• 1098 remains busy and has switched to a resistance level
• Current range: 1080 to 1098

Further levels in both directions:

• Below: 1080, 1043 and 1024
• Above: 1098, 1134, 1151 and 1175

OANDA’s Open Positions Ratio

The XAU/USD ratio continues to show little change. Long positions retain a solid 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.