Gold Dips as Jobless Claims Drop, Markets Eye Consumer Confidence

Gold has posted considerable losses in the Thursday session. In North American trade, the spot price for an ounce of gold is $1317.95, down 0.54% on the day. On the release front, unemployment claims dropped to 226 thousand, just below the estimate of 226 thousand. Manufacturing reports were mixed. The Philly Fed Manufacturing Index dropped to 22.3, missing the forecast of 23.1 points. There was better news from the Empire State Manufacturing Index, which jumped to 22.5, crushing the estimate of 14.9 points. On Friday, the US releases two key construction reports and Preliminary UoM Consumer Sentiment.

After an uneventful week, gold prices have dropped on Thursday, after a strong unemployment claims release. Still, there are expectations that gold could quickly recover, as the markets nervously follow the aftermath of a toxic attack in London in early March. Relations between the UK and Russia have nosedived after a toxic attack in London aimed against a former Russian intelligence officer was poisoned, and the UK has laid the blame on the Kremlin. The May government has ordered the expulsion of 23 Russian diplomats, and Russia is sure to retaliate. As well, President Trump has slapped tariffs on steel, and this could trigger a response from the EU and China. These hotspots have dampened risk appetite on the part of investors, and if these crises continue, safe-haven gold could be a big winner.

The Federal Reserve is widely expected to raise interest rates next week. According to the CME Group, the odds of a quarter-point raise stand at 89 percent. What can we expect from the Fed during the year? The pressing question is how many rate hikes will we see in 2018. The current Fed projection remains at three hikes, but the superb nonfarm payrolls report last week has raised speculation that the Fed could accelerate the pace to four hikes, which would be good news for the US dollar. Investors will be keeping a close eye on key US data, especially inflation indicators. If these numbers improve, we’re likely to see four rate hikes in 2018.

XAU/USD Fundamentals

Thursday (March 15)

  • 8:30 US Empire State Manufacturing Index. Estimate 14.9. Actual 22.5
  • 8:30 US Philly Fed Manufacturing Index. Estimate 23.1. Actual 22.3
  • 8:30 US Unemployment Claims. Estimate 227K. Actual 226K
  • 8:30 US Import Prices. Estimate 0.3%. Actual 0.4%
  • 10:00 US NAHB Housing Market Index. Estimate 72. Actual 70
  • 10:30 US Natural Gas Storage. Estimate -99B. Actual -93B
  • 16:00 US TIC Long-Term Purchases. Estimate 35.9B

Friday (March 16)

  • 8:30 US Building Permits. Estimate 1.33M
  • 8:30 US Housing Starts. Estimate 1.30M
  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 99.6
  • 10:00 US JOLTS Job Openings. Estimate 5.85M 

*All release times are GMT

*Key events are in bold

XAU/USD for Thursday, March 15, 2018

XAU/USD March 15 at 11:30 EST

Open: 1325.07 High: 1328.01 Low: 1316.92 Close: 1317.95

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1260 1285 1307 1337 1375 1416
  • XAU/USD posted small gains in the Asian session. The pair posted considerable losses in European trade and is flat 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 and 1260
  • Above: 1337, 1375, 1416 and 1433

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Thursday session. Currently, long positions have a majority (55%), indicative of trader bias towards XAU/USD reversing directions and moving higher.

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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.