XAU/USD – Gold Dips as US Services PMI Climbs

Gold has posted slight losses in the Monday session. In North American trade, the spot price for an ounce of gold is $1174.46. On the release front, there was good news in the services sector, as ISM Non-Manufacturing PMI jumped to 57.2, beating the forecast of 55.3.

November was a dismal month for gold, as the metal dropped 8.0 percent, its sharpest monthly decline since June 2013. Gold continues to trade at its lowest levels since February. A strong US economy has not been good news for the safe-haven metal, as investors have regained an appetite for riskier assets. As well, it is virtually certain that the Federal Reserve will raise interest rates next week, which would mark the first hike by the Fed in a year. Expectations of a rate hike have sent the US dollar broadly higher, which has weighed on gold prices.

Employment numbers were on center stage on Friday, as the US released key employment indicators. In the US, the numbers were a mix. Nonfarm Payrolls improved to 178 thousand, edging above the forecast of 177 thousand. This marked a 4-month high. However, Average Hourly Earnings, which measures wage growth, surprised with a decline of 0.1%, short of the estimate of 0.2%. This was the first decline in wage growth since March. The unemployment rate dropped to just 4.6%, well below the forecast of 4.9%. The strong labor market has been a key factor in the strong US economy, which saw GDP grow at a clip of 3.2% in the third quarter.

XAU/USD Fundamentals

Monday (December 5)

• 8:30 US FOMC Member William Dudley Speech
• 9:45 US Final Services PMI. Estimate 54.9. Actual 54.6
• 10:00 US ISM Non-Manufacturing PMI. Estimate 55.3. Actual 57.2
• 10:00 US Labor Market Conditions Index. Actual 1.5
• 14:05 US FOMC Member James Bullard Speech

*All release times are EST

*Key events are in bold

XAU/USD for Monday, December 5, 2016

XAU/USD December 5 at 13:10 EST

Open: 1180.22 High: 1181.49 Low: 1156.91 Close: 1174.46

XAU/USD Technical

• XAU/USD posted limited movement in the Asian session. The pair posted considerable losses in European trade but has rebounded in the North American session
• 1146 is providing support
• 1174 is under pressure in resistance and could break in the North American session
• Current range: 1146 to 1174

Further levels in both directions:

• Below: 1146, 1130 and 1111
• Above: 1174, 1205, 1223 and 1245

OANDA’s Open Positions Ratio

In the Monday session, XAU/USD ratio is showing long positions with a substantial majority (79%). This is indicative of trader bias towards XAU/USD reversing directions and moving to higher levels.

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