XAU/USD – Gold slides as treasury bonds climb

Gold has posted sharp losses gains in the Monday session. In North American trade, the spot price for one ounce of gold is $1187.14, down 1.38% on the day. U.S banks are closed for Columbus Day and there are no U.S events on the schedule.

Nonfarm payrolls for September may have missed its target, but the Federal Reserve remains on track to raise interest rates in December. The anticipation of further rate hikes in December and throughout 2019 has boosted the yield on U.S treasury bills, while at the same time weighing heavily on gold prices. On Friday, 10-year treasury bonds climbed to their highest level since 2011, and if yields continue to climb during the week, gold’s downward spiral could continue.

In the U.S, the labor market remains hot, but September’s numbers were mixed. Nonfarm payrolls dropped sharply to 134 thousand, its smallest gain in a year. This was well short of the estimate of 185 thousand. However, one factor in the disappointing release is Hurricane Florence, which led to many employees being unable to report to work during the storm. Wages appear headed in the right direction – Average Hourly Earnings gained 0.3% in September, and are up 2.9% on a year-to-year basis. The unemployment rate fell to 3.7%, its lowest level since 1969. The mixed numbers put a slight damper on the odds of a December hike, which dipped to 76% after the job releases, down from 80% prior to the releases. A December rate hike would be the fourth this year, with the Fed expected to raise rates another three times in 2019.

Italy and China drag markets lower

XAU/USD Fundamentals

  • There are no U.S events

XAU/USD for Monday, October 8, 2018

XAU/USD October 8 at 10:15 DST

Open: 1203.78 High: 1204.19 Low: 1184.24 Close: 1187.14

 

XAU/USD Technical

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

XAU/USD posted considerable losses in the Asian session. The pair edged lower gains in European trade and has recorded further 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

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.