XAU/USD – Gold Shrugs off Excellent Jobless Report, Retail Sales Next

Gold has been choppy on Thursday but is unchanged over the course of the day. In the North American session, the metal is trading at a spot price of $1256.37 per ounce. On the release front, unemployment claims had another excellent outing, dropping to 246 thousand.

There was more good news from the US labor market, as unemployment claims sparkled again last week. The key indicator dropped to 246 thousand last week, down slightly from 249 thousand a week earlier. The estimate stood at 252 thousand, marking a tenth consecutive week that the indicator has beaten the forecast. Strong job numbers is one of the main arguments of proponents of a rate hike in December, as the labor market, which is close to capacity, continues to fuel steady economic growth.

On Wednesday, the Federal Reserve released the minutes of its September policy meeting. The minutes contained no dramatic news, but point to deep divisions in the FOMC over monetary policy. This was already apparent in the September rate vote, when three members voted against the decision to maintain rates at 0.25 percent. The minutes indicated that some of the members who voted to hold rates chose to fall in line with Janet Yellen, but are in favor of raising rates “relatively soon”. This means that Yellen will face a tough battle if she wants to hold off a rate in December, given that there is significant support for rate hike in December. The markets have priced in a December hike at 66 percent and the positive sentiment could help the US dollar continue to move higher. The Fed will next meet in November, but analysts don’t expect a move just a week before the presidential election.

XAU/USD Fundamentals

Thursday (October 13)

• 8:30 US Unemployment Claims. Estimate 252K. Actual 246K
• 8:30 US Import Prices. Estimate 0.1%. Actual 0.1%
• 10:30 US Natural Gas Storage. Estimate 84B
• 11:00 US Crude Oil Inventories. Estimate 0.4M
• 13:01 US 30-year Bond Auction

Friday (October 14)

• 12:30 US Core Retail Sales. Estimate 0.4%
• 12:30 US PPI. Estimate 0.2%
• 12:30 US Retail Sales. Estimate 0.6%
• 14:00 US Preliminary UoM Consumer Sentiment. Estimate 92.1
• 17:30 US Federal Chair Janet Yellen Speaks

*All release times are EDT

*Key events are in bold

XAU/USD for Thursday, October 13, 2016

XAU/USD October 13 at 13:35 EDT

Open: 1254.02 High: 1261.91 Low: 1252.13 Close: 1256.37

XAU/USD Technical

• XAU/USD has been choppy in the Thursday session, showing limited movement
• 1245 is providing support
• There is resistance at 1279
• Current range: 1245 to 1279

Further levels in both directions:

• Below: 1245, 1223 and 1199
• Above: 1279, 1307 and 1331

OANDA’s Open Positions Ratio

XAU/USD ratio is showing long positions with a substantial majority (78%). This is indicative of trader bias towards XAU/USD breaking out and moving upwards.

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