Gold Unchanged on Higher Jobless Claims and French Election Jitters

Gold is unchanged in the Thursday session, after posting losses on Wednesday. In North American trade, gold is trading at $1279.91 per ounce. On the release front, manufacturing and employment numbers were soft, as the Philly Fed Manufacturing Index and unemployment claims missed their estimates. Later in the day, US Treasury Secretary Robert Mnuchin will deliver remarks in Washington.

Gold prices have climbed sharply in April, with gains of 2.6 percent. The base metal has benefited from geopolitical tensions in Syria and North Korea, as well as uncertainty over the French election on April 23. These concerns have dampened risk appetite, as investors have snapped up gold, traditionally a safe-haven asset.The French election race is one of the tightest in decades, with the four front-runners clustered within a few percentage points. Given the closeness and unpredictability of the election, the latest opinion polls are moving the markets. On Thursday, a Harris Interactive opinion poll showed centrist Emmanuel Macron gaining ground, with 25% of the vote. Far-right candidate Marine Le Pen follows with 22%. Next are Republican candidate Francois Fillon and left-wing candidate Jean-Luc Melenchon, both tied at 19%. Le Pen and Melenchon are both running on an anti-EU platform, so the markets are cheering for Macron and Fillion. We can expect more volatility from gold as the turbulent election winds up and French voters have their say.

With the US economy continuing to perform well, the markets are expecting the Fed to continue to gradually raise rates in 2017. The Fed has broadly hinted that it plans two more rate hikes this year, but there have been calls from some Fed policymakers for three more hikes. However, soft retail sales and CPI numbers in March are likely to make the Fed more dovish, and on Tuesday, the Atlanta and New York Federal Reserve lowered their outlook for US economic growth for the first quarter. The Fed can point to a labor market that is close to capacity as well as strong consumer confidence, but surprisingly, this has not translated into stronger consumer spending, a key driver of economic growth. The odds of a June hike have slipped to 46% according to the CME Group, down sharply from 65% in early April.

XAU/USD Fundamentals

Thursday (April 20)

• 8:30 US Philly Fed Manufacturing Index. Estimate 25.6. Actual 22.0
• 8:30 US Unemployment Claims. Estimate 241K. Actual 244K
• 13:15 US Treasury Secretary Steven Mnuchin Speech

*All release times are GMT

*Key events are in bold

XAU/USD for Thursday, April 20, 2017

XAU/USD April 20 at 13:00 EST

Open: 1279.56 High: 1283.47 Low: 1276.50 Close: 1279.91

XAU/USD Technical

• XAU/USD showed limited movement in the Asian and European sessions. In North American trade, the pair edged higher but has retracted
• 1260 is providing support
• 1285 remains a weak line as resistance
• Current range: 1260 to 1285

Further levels in both directions:

• Below: 1260, 1232 and 1199
• Above: 1285, 1307, 1337 and 1367

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Thursday session. Currently, long and short positions are almost evenly split, indicative of a lack of trader bias as to what direction XAU/USD will take next. 

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