Gold Edges Higher as US Manufacturing, Construction Numbers Disappoint

Gold has recorded small gains on Monday, as the metal trades at a spot price of $1352.27 per ounce in the North American session. On the release front, ISM Manufacturing PMI came in at 52.6 points, short of expectations. As well, Construction Spending and Manufacturing Prices also missed their estimates.

Gold prices climbed 2.0 percent last week, buoyed by the Federal Reserve announcement and a weak GDP report. The Fed continued to hold the course on interest rates, maintaining levels at 0.25%. A September hike is possible, but the Fed will want to see stronger numbers before making a move. On Sunday, FOMC William Dudley, a close ally of Janet Yellen, said that the Brexit fallout posed a risk to the US economy and urged the Fed to proceed with caution before raising interest rates. The US will release wage growth and nonfarm payrolls later in the week, and these key employment numbers will be carefully monitored by the Fed as it mulls over a possible rate hike. If these releases do not meet expectations, the likelihood a move in September will sharply decrease. Preliminary GDP for the second quarter disappointed, as the markets had expected a strong gain of 2.6%, while the economy responded with a much smaller gain of 1.2%.

The week has started with some soft releases, helping gold to remain at the $1350 level. ISM Manufacturing PMI and Manufacturing Prices pointed to expansion but both missed their estimates. As well, Construction Prices disappointed with a drop of 0.6%, its fourth decline in the past five months. These figures point to continuing weakness in the manufacturing and construction sectors.

XAU/USD Fundamentals

Sunday (July 31)

  • 21:15 FOMC Member William Dudley Speaks

Monday (August 1)

  • 9:45 US Final Manufacturing PMI. Estimate 52.9. Actual 52.9
  • 10:00 ISM Manufacturing PMI. Estimate 53.1. Actual 52.6
  • 10:00 US Construction Spending. Estimate 0.5%. Actual -0.6%
  • 10:00 ISM Manufacturing Prices. Estimate 61.0. Actual 55.0
  • Tentative – US Loan Officer Survey

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Monday, August 1, 2016

XAU/USD August 1 at 12:30 EDT

Open: 1349.07 High: 1352.97 Low: 1346.22 Close: 1352.27

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1279 1307 1331 1361 1388 1416
  • XAU/USD showed limited movement throughout the Monday session
  • 1331 is providing support
  • There is resistance at 1361
  • Current range: 1331 to 1361

Further levels in both directions:

  • Below: 1331, 1307, 1279 and 1255
  • Above: 1361, 1388 and 1416

OANDA’s Open Positions Ratio

In the XAU/USD ratio, long positions have a strong majority (63%), indicative of trader bias towards XAU/USD continuing to move upwards. 

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.