Gold gains ground on risk apprehension, weak U.S employment data

Gold has posted considerable gains in the Thursday session. In North American trade, the spot price for one ounce of gold is $1242.03, up 0.44% on the day. In economic news, ADP nonfarm payrolls plunged to 179 thousand, well off the estimate of 196 thousand. This was the lowest level since May. Unemployment claims edged lower to 231 thousand, but this was higher than the estimate of 226 thousand. There was better news from the services sector, as ISM Non-Manufacturing PMI improved to 60.7, easily beating the estimate of 59.1 points. On Friday, the U.S. releases wage growth and nonfarm payrolls.

A sharp downturn in global equity markets has been good news for gold prices, as investors have flocked to safe-haven assets like gold. The base metal has climbed 1.60% this week. Earlier on Thursday, gold broke above $1240 for the first time since the first week in July. In addition to disappointing job numbers out of the U.S., an inverted curve in U.S Treasuries has raised risk apprehension on Thursday, since it is often a sign that a recession is on the way.

Investor risk appetite jumped early in the week, after the announcement that President Trump had agreed to put a hold on any further tariffs against China. However, the optimism didn’t last long, as investors have questioned whether the 90-day reprieve will lead to an improvement in the deteriorating trade relations between the U.S and China. Unless the sides make significant progress, safe-haven gold could remain in demand for jittery investors.

XAU/USD Fundamentals

Thursday (December 6)

  • All Day – OPEC Meetings
  • 7:30 US Challenger Job Cuts. Actual 51.5%
  • 8:15 US ADP Nonfarm Employment Change. Estimate 196K. Actual 179K
  • 8:30 US Revised Nonfarm Productivity. Estimate 2.3%. Actual 2.3%
  • 8:30 US Revised Unit Labor Costs. Estimate 1.1%. Actual 0.9%
  • 8:30 US Trade Balance. Estimate -55.2B. Actual -55.5B
  • 8:30 US Unemployment Claims. Estimate 226K. Actual 231K
  • 9:45 US Final Services PMI. Estimate 54.4. Actual 54.7. Actual 60.7
  • 10:00 US Factory Orders. Estimate -1.9%. Actual -2.1%
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 59.2
  • 11:00 US Crude Oil Inventories. Estimate -1.3M. Actual -7.3M
  • 12:15 US FOMC Member Bostic Speaks
  • 18:30 US FOMC Member Williams Speaks
  • 18:45 US Federal Reserve Chair Powell Speaks

Friday (December 7)

  • 8:30 US Average Hourly Earnings. Estimate 0.3%
  • 8:30 US Nonfarm Employment Change. Estimate 200K
  • 8:30 US Unemployment Rate. Estimate 3.7%
  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 97.1

*All release times are EST

*Key events are in bold

XAU/USD for Thursday, December 6, 2018

XAU/USD December 6 at 12:30 EST

Open: 1237.03 High: 1244.36 Low: 1234.481 Close: 1242.03

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1204 1220 1236 1261 1284 1306

XAU/USD posted gains in the Asian session but gave these up in the European session. The pair has moved higher in North American trade

  • 1236 was tested earlier in support
  • 1261 is the next resistance line
  • Current range: 1236 to 1261

Further levels in both directions:

  • Below: 1236, 1220, 1204 and 1170
  • Above: 1261, 1284 and 1306

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.