Gold Rebounds, US Services PMI Rises

Gold has posted gains on Tuesday, reversing the downward movement in the Monday session. In the North American session, gold is trading at a spot price of $1229.64 an ounce. On the release front, the US trade deficit widened and missed expectations. ISM Non-Manufacturing PMI climbed to 54.3 points, slightly above the estimate. On the employment front, JOLTS Job Openings dropped to 5.45 million, well short of expectations.

Last week’s US employment indicators pointed to a solid US labor market. Nonfarm Payrolls came in at 215 thousand, above the estimate of 205 thousand. The unemployment rate edged up to 5.0%. However, wage growth remains weak, as Average Hourly Earnings posted a small gain of 0.3%, close to the estimate of 0.2%. JOLTS Job Openings failed to keep pace. The indicator slipped to 54.5 million, marking a 3-month low. Solid job numbers are critical to continued economic expansion and are a key factor in the Fed’s decision-making process regarding another rate hike.

The US dollar posted broad losses last week, courtesy of a surprisingly dovish speech from Fed chair Janet Yellen in New York. Yellen warned of risks to the US economy from uncertainty in the global markets and the slowdown in China, and poured cold water on speculation of an April rate hike. Prior to her speech, several Fed members issued hawkish comments, some going as far as calling for a rate hike at the April policy meeting. The contradictory messages coming out of Fed points to a split in the FOMC concerning monetary policy, although Yellen is likely to have the last word. Analysts will be paying close attention to the Fed minutes on Wednesday, looking for clues as to further rate projections. The markets are hoping the minutes will provide some clarity about the Fed’s plans, after a week of mixed messages from the central bank. The release of the minutes should be treated as a market-mover, and we could see some volatility in the markets following this release.

XAU/USD Fundamentals

Tuesday (April 5)

• 8:30 US Trade Balance. Estimate -46.3B. Actual -47.1B
• 9:45 US Final Services PMI. Estimate 51.0. Actual 51.3
• 10:00 US ISM Non-Manufacturing PMI. Estimate 54.1. Actual 54.3 
• 10:00 US JOLTS Jobs Openings. Estimate 5.57M. Actual 5.45M
• 10:00 US IBD/TIPP Economic Optimism. Estimate 47.7. Actual 46.3 

Upcoming Key Events

Wednesday (April 6)

• 14:00 FOMC Meeting Minutes

*Key releases are highlighted in bold

*All release times are DST

XAU/USD for Tuesday, April 5, 2016

XAU/USD April 5 at 11:20 DST

Open: 1215.26 Low: 1214.93 High: 1236.85 Close: 1229.64

XAU/USD Technical

• XAU/USD posted gains in the Asian and European sessions. The pair has reversed directions in North American trade
• 1205 is providing support
• 1232 was tested earlier in resistance and is a weak line. It could break in the North American session
• Current range: 1205 to 1232

Further levels in both directions:

• Below: 1205, 1191 and 1169
• Above: 1232, 1255, 1279 and 1303

OANDA’s Open Positions Ratio

XAU/USD ratio is showing little change on Tuesday. Long positions have a strong majority (61%), indicative of trader bias towards gold continuing to climb higher.

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.