Gold remains subdued, US job report misses mark

Gold has posted small gains in the Tuesday session. In North American trade, the spot price for one ounce of gold is $1255.58, up 0.18% on the day. On the release front, JOLTS Jobs Openings fell to 6.64 million, well below the estimate of 6.88 million. On Wednesday, the focus will be on consumer inflation reports. Core CPI and CPI are both expected to drop by 0.2%.

Gold is sensitive to interest rate moves and investors and traders continue to look for clues about the Federal Reserve’s monetary plans. The Fed is expected to continue raising rates in the second half of 2018, but it remains unclear if the Fed will raise rates once or twice. The highly-anticipated FOMC minutes did not shed any light on this question and had little effect on gold prices. The minutes were somewhat dovish in tone, as policymakers gave a thumbs-up to the strong U.S economy, but expressed concern about developments abroad. These include growing trade tensions with U.S trading partners, as well as political and economic developments in Europe. The minutes also reiterated the Fed’s support for a “gradual” raise in interest rates. The markets are circling the September policy meeting for the next rate hike, with the CME Group setting the odds of a quarter-point hike at 80%.

U.S employment data was a mix on Friday, as job growth remained above the 200-thousand level, but wage growth faltered. Nonfarm payrolls dropped to 213 thousand, but this beat the estimate of 195 thousand. Average Hourly Earnings edged lower to 0.2%, shy of the estimate of 0.3%. There was a surprise as the unemployment rate climbed to 4.0%, above the forecast of 3.8%. The data demonstrates that the U.S labor market remains strong, and the economy continues to perform well. The markets remain bullish on U.S growth, despite uncertainty in Europe and elsewhere, as well as the growing threat of an all-out trade war between the U.S and China.

  Commodities Weekly: Gold saved by dollar’s retracement

  All is quiet on the western trade war front

XAU/USD Fundamentals

Tuesday (July 10)

• 10:00 US JOLTS Job Openings. Estimate 6.88M. Actual 6.64M

Wednesday (July 11)

• 8:30 US Core PPI. Estimate 0.2%
• 8:30 US PPI. Estimate 0.2%
• 10:00 US Final Wholesale Inventories. Estimate 0.5%
• 10:30 US Crude Oil Inventories
• 12:30 US FOMC Member Rafael Bostic Speaks
• 13:01 US 10-year Bond Auction
• 16:30 US FOMC Member John Williams Speaks

*All release times are DST

*Key events are in bold

XAU/USD for Tuesday, July 10, 2018

XAU/USD July 10 at 12:15 DST

Open: 1257.88 High: 1260.45 Low: 1247.42 Close: 1255.58

XAU/USD Technical

XAU/USD showed little movement in the Asian session. The pair recorded considerable losses in European trade and has recovered most of these gains in the North American session

• 1236 is providing support
• 1260 was tested earlier in resistance
• Current range: 1236 to 1260

Further levels in both directions:

• Below: 1236, 1220, 1204
• Above: 1260, 1285, 1307 and 1322

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