Gold Gains Ground on Mixed US Employment Data

Gold has rebounded on Thursday, posting considerable gains. In North American trade, the spot price for an ounce of gold is $1381.81, up 0.41% on the day. On the release front, ADP Payrolls report jumped to 250 thousand, crushing the estimate of 191 thousand. However, unemployment claims rose to 250 thousand, higher than the forecast of 241 thousand. The focus remains on job data on Friday, with the release of Average Hourly Earnings and Nonfarm Payrolls. Traders should be prepared for some movement in gold prices in Friday’s North American session.

The highly-anticipated Federal Reserve minutes were released on Wednesday. The minutes provided details of the December policy meeting, where the Fed raised interest rates for a third time in 2018. The minutes were positive in tone, reflecting a robust US economy. Policymakers noted that economic activity was expanding at a “solid pace”, buoyed by improved consumer and business spending, as well as a stronger global economy. FOMC members revised upwards their projection for GDP in 2018, from 2.1% to 2.5%. The minutes noted that new tax reform is expected to raise economic growth, but the Fed is unsure on the impact of the new law in areas such as the labor market. As for inflation, Fed officials remain concerned that inflation levels are well below the target of 2%, and this trend could continue.

US employment numbers were a mixed bag on Thursday, which weighed broadly on the US dollar. Will we see a repeat on Friday? The markets are expecting wage growth to improve to 0.3%, but are braced for a slowdown from Nonfarm Payrolls. Investors will be keeping a keen eye on these December releases, as will the Federal Reserve. Currently, the odds of a January rate hike are at 99.5%, according to the CME. However, a poor showing by Nonfarm Payrolls could lower these odds and send the US dollar to lower ground.

XAU/USD Fundamentals

Thursday (January 4)

• 7:30 US Challenger Job Cuts. Actual -3.6%
• 8:15 US ADP Nonfarm Employment Change. Estimate 191K. Actual 250K
• 8:30 US Unemployment Claims. Estimate 241K. Actual 250K
• 9:45 US Final Services PMI. Estimate 52.4. Actual 53.7
• 10:30 US Natural Gas Storage. Estimate -221B
• 11:00 US Crude Oil Inventories. Estimate -5.2M

*All release times are GMT

*Key events are in bold

XAU/USD for Thursday, January 4, 2018

XAU/USD January 4 at 12:05 EST

Open: 1313.13 High: 1320.14 Low: 1305.95 Close: 1318.81

XAU/USD Technical

• XAU/USD posted slight losses in the Asian session but recovered in European trade. The pair continues to move higher in North American trade
• 1307 is providing support
• 1337 is the next resistance line
• Current range: 1307 to 1337

Further levels in both directions:

• Below: 1307, 1285, 1260 and 1240
• Above: 1337, 1375 and 1416

OANDA’s Open Positions Ratio

XAU/USD ratio is showing movement towards long positions. Currently, long positions have a majority (58%), indicative of trader bias towards XAU/USD continuing to move to higher ground.

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.