Gold climbs above $1200 as U.S dollar dips

Gold has posted considerable gains on Thursday, erasing much of the losses which marked the Wednesday session. In North American trade, the spot price for one ounce of gold is $1201.25, up 0.30% on the day. On the release front, unemployment claims dropped to 207 thousand, better than the estimate of 214 thousand. On Friday, the focus will be on employment data, as the U.S releases wage growth and official nonfarm payrolls.

U.S job numbers continue to look sharp, reflective of a red-hot labor market. Unemployment claims dropped from 214 thousand to 207 thousand. This release comes on the heels of ADP nonfarm payrolls, which jumped 230 thousand in September. This marked the strongest increase in private sector jobs since March. Can the labor market keep up its dizzying pace? We could see some soft numbers as early as Friday, based on markets forecasts. Wage growth is expected to drop from 0.4% to 0.3%, while nonfarm payrolls is forecast to fall from 201 thousand to 185 thousand. Traders should be prepared for some volatility in gold prices during Friday’s North American session.

A spike in U.S treasury bond yields this week could mean headwinds are in store for gold, but investors have snapped up gold on Thursday. Higher treasury yields are weighing on equity markets, which has dampened risk appetite and boosted gold prices. On Wednesday, Federal Reserve Chair Jerome Powell said that the Fed could raise rates above a “neutral” setting, as the U.S economy continues its strong expansion. The hawkish comments, which reinforced the strong likelihood of a rate hike in December, pushed gold prices lower on Wednesday.

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XAU/USD Fundamentals

Thursday (October 4)

  • 7:30 US Challenger Job Cuts. Actual 70.9%
  • 8:30 US Unemployment Claims. Estimate 214K. Actual 207K
  • 9:15 US FOMC Member Randal Quarles Speaks
  • 10:00 US Factory Orders. Estimate 2.2%. Actual 2.3%
  • 10:30 US Natural Gas Storage. Estimate 47B. Actual 98B

Friday (October 5)

  • 8:30 US Average Hourly Earnings. Estimate 0.3%
  • 8:30 US Nonfarm Employment Change 185K
  • 8:30 US Unemployment Rate. Estimate 3.8%

*All release times are DST

*Key events are in bold

XAU/USD for Thursday, October 4, 2018

XAU/USD October 4 at 11:20 DST

Open: 1197.65 High: 1206.81 Low: 1196.04 Close: 1201.25

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1115 1146 1170 1204 1220 1236

XAU/USD ticked lower in the Asian session. The pair posted considerable gbains in European trade. The pair has posted slight losses in North American trade

  • 1170 is providing support
  • 1204 is the next resistance line
  • Current range: 1170 to 1204

Further levels in both directions:

  • Below: 1170, 1146 and 1115
  • Above: 1204, 1220, 1236 and 1261

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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.