Gold Drop Continues on Stellar US Jobless Claims

Gold is lower on Thursday, continuing the downward trend which marked the Wednesday session. Gold is trading at a spot price of $1227.20 an ounce in the North American session. On the release front, CPI and Core CPI both posted small gains of 0.1%, short of their estimates. US Unemployment Claims dropped sharply to 253 thousand, much stronger than the forecast.

US inflation indicators continue to point to a soft inflation picture. CPI and Core CPI, key gauges of consumer inflation, posted small gains of 0.1%. The Core CPI release was particularly disappointing, coming after two consecutive gains of 0.3%. The weak inflation numbers will make it difficult to make a case for raising interest rates in the first half of 2016 and bolsters the dovish position of Janet Yellen and her supporters. Deustche Bank analyst Brett Ryan summed up the soft US inflation picture, noting that “we’re still importing deflation from other areas of the world”. There was much better news on the employment front, as Unemployment Claims fell to 253 thousand, its lowest weekly reading since March 1973. This release is another confirmation of a robust US labor market.

US retail sales reports, a key measure of consumer spending, disappointed in March. Core Retail Sales improved to 0.2%, but fell short of the forecast of 0.4%. Retail Sales surprised with a decline of 0.3%, shy of the estimate of a 0.1% gain. It marked the second straight drop for the indicator. Consumer spending represents the biggest part of the economy, so these figures could spell trouble at a time that the export sector remains soft due to weak global demand. PPI, a key gauge of inflation in the manufacturing sector, continues to struggle, posting a third decline in four months. The index dipped 0.1%, well off the estimate of a 0.3% gain.

XAU/USD Fundamentals

• 8:30 US CPI. Estimate 0.2%. Actual 0.1%
• 8:30 US Core CPI. Estimate 0.2%. Actual 0.1%
• 8:30 US Unemployment Claims. Estimate 270K. Actual 253K 
• 10:30 FOMC Member Jerome Powell Speaks
• 10:30 US Natural Gas Storage. Estimate 1B
• 13:01 US 30-year Bond Auction

Upcoming Key Events

Friday (April 15)

• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 91.9

*Key releases are highlighted in bold

*All release times are DST

XAU/USD for Thursday, April 14, 2016

XAU/USD April 14 at 12:00 DST

Open: 1242.90 Low: 1226.60 High: 1245.80 Close: 1227.20

XAU/USD Technical

• XAU/USD posted gains in the Asian session. The pair pushed upwards in the European session but gave up these gains. The pair has resumed downward movement in North American trade
• 1232 has switched to a resistance role following losses by XAU/USD. It is a weak line
• 1255 is providing support
• Current range: 1205 to 1232

Further levels in both directions:

• Below: 1205, 1191 and 1165
• Above: 1232, 1255, 1279 and 1303

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged on Thursday. Long positions command a solid majority (56%), which is indicative of trader bias towards gold reversing directions and moving 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.