Gold Dips on Sharp Unemployment Claims, Next Stop Nonfarm Payrolls

Gold has posted losses in the Thursday session, erasing the gains from Wednesday. In North American trade, gold is trading at $1251.87 per ounce. On the release front, unemployment claims dropped to 234 thousand, well below the forecast of 251 thousand. On Friday, the US releases three key employment indicators – Nonfarm Employment Change, Average Hourly Earnings and the unemployment rate.

Investors remain cautious ahead of a two-day summit between President Donald Trump and Chinese President Xi Jinping. The two leaders will meet on Thursday in Florida. There are plenty of potential sticking points between the US and China, including trade, currencies and North Korea. During the presidential campaign, Trump harshly criticized China for its trade and currency policies, but he has moderated his stance since becoming president. However, any undiplomatic incidents could unnerve investors and send gold prices higher.

There were no surprises from the minutes of the Fed March policy meeting. At that meeting, the Fed raised rates a quarter-point to 0.75%, but the dovish rate statement disappointed the markets, triggering broad losses for the US dollar. In the minutes, policymakers noted upside risk to the US economy, but remained divided on whether inflation will rise to the Fed target of 2.0%. Most policymakers were in favor of taking steps to trim the $4.5 trillion balance, which has ballooned since the Fed implemented its aggressive quantitative easing program back in 2008. So what’s next for the Fed? According to the CME’s Fed Watch, the odds of a rate hike at the May meeting are just 5 percent, while the likelihood of a rate hike in June stand at 63 percent. Fed policymakers appear divided on how many more times the Fed will press the rate trigger. Last week, FOMC member Eric Rosengren called for three more hikes, saying the Fed should raise rates in June, September and December. Rosengren said that employment and inflation levels were close to the Fed’s targets, and that three additional hikes were needed in order to prevent the US economy from overheating. However, a majority of FOMC members are in favor of just two more hikes this year.

XAU/USD Fundamentals

Thursday (April 6)

• 7:30 US Challenger Job Cuts. Actual -2.0%
• 8:30 US Unemployment Claims. Actual 251K. Actual 234K
• 10:30 US Natural Gas Storage. Estimate 10B. Actual 2B

Friday (April 7)

• 8:30 US Average Hourly Earnings. Estimate 0.2%
• 8:30 US Nonfarm Employment Change. Estimate 174K
• 8:30 US Unemployment Rate. Estimate 4.7%

*All release times are GMT

*Key events are in bold

XAU/USD for Thursday, April 6, 2017

XAU/USD April 6 at 13:35 EST

Open: 1258.26 High: 1258.84 Low: 1249.62 Close: 1251.87

XAU/USD Technical

• XAU/USD posted slight losses in the Asian session. The pair ticked lower in European trade and is steady in the North American session
• 1232 is providing support
• 1260 is the next resistance line
• Current range: 1232 to 1260

Further levels in both directions:

• Below: 1232, 1199, 1174 and 1146
• Above: 1260, 1285 and 1307

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Thursday session. Currently, long positions have a majority (54%), indicative of trader bias towards XAU/USD reversing directions and moving higher.

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