Gold Dips Lower, US Jobless Claims Jumps

Gold has dipped on Thursday, reversing the gains which marked the Wednesday session. The metal is trading at a spot price of $1268.24 an ounce in the North American session. On the release front, Unemployment Claims were up sharply to 294 thousand, well above the estimate of 277 thousand. We’ll also hear from three FOMC members during the day. Friday is a data-heavy day, with the US publishing retail sales, inflation and consumer confidence reports.

May showers, June rate hike? Gold investors continue to look for hints as to the Federal Reserve’s monetary plans. In its April policy statement, the Fed didn’t raise rates, but the message to the markets with regard to the US economy was one of cautious optimism. The statement noted continuing improvement in the labor market but added that it was keeping a watchful eye on low inflation levels. The Fed statement appeared to leave the open to a June hike, but last week’s soft payrolls report has greatly reduced the likelihood of a June move. Last week, New York Fed president William Dudley said he remains confident that the Fed could raise rates as much as twice this year, but many analysts are skeptical if the Fed will raise rates before 2017. Economic releases, especially employment and inflation indicators, will be major factors as the Fed must decide whether to press the rate trigger in June. Gold is sensitive to interest rate moves, so any hints about a June hike could push gold prices downwards.

It continues to be one step forward, one step backward for US job numbers. Unemployment Claims, which have been moving higher, surged last week, hitting 294 thousand. This was the highest weekly claims level since July 2015. On Tuesday, JOLT Job Openings looked sharp in April, jumping to 5.76 million. This figure was much stronger than the estimate of 5.56 million. However, last week’s host of employment numbers were a mix, which predictably has raised concerns about the strength of the US labor market. Last week, Nonfarm Payrolls looked awful, as the key indicator slid to just 160 thousand, well short of the forecast of 203 thousand. This marked the lowest reading in seven months. On a brighter note, wages showed growth, as Average Hourly Earnings posted a second straight gain of 0.3%.

XAU/USD Fundamentals

Thursday (May 12)

  • 8:30 US Unemployment Claims. Estimate 277K. Actual 294K
  • 8:30 US Import Prices. Estimate 0.6%. Actual 0.3%
  • 10:30 US Natural Gas Storage. Estimate 60B
  • 11:00 US FOMC Member Loretta Mester Speaks
  • 11:45 US FOMC Member Eric Rosengren Speaks
  • 13:01 US 30-year Bond Auction
  • 13:30 US Member Esther George Speaks

Upcoming Key Events

Friday (May 13)

  • 8:30 US Core Retail Sales. Estimate 0.3%
  • 8:30 US PPI. Estimate 0.3%
  • 8:30 US Retail Sales. Estimate -0.3%
  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 89.9 points

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Thursday, May 12, 2016

XAU/USD May 12 at 11:50 EDT

Open: 1277.61 Low: 1265.62 High: 1280.76 Close: 1268.24

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1207 1232 1255 1279 1303 1324
  • XAU/USD posted losses in the Asian and European sessions. The pair has been choppy in North American trade
  • 1255 is providing support
  • There is resistance at 1279
  • Current range: 1255 to 1279

Further levels in both directions:

  • Below: 1255, 1232 and 1207
  • Above: 1279, 1303, 1324 and 1345

OANDA’s Open Positions Ratio

XAU/USD ratio is almost unchanged on Thursday. Long positions have a strong majority (63%). This is indicative of trader bias towards XAU/USD reversing directions and climbing 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.