Gold – Investor jitters send gold to 27-week high

Gold continues to move upwards this week. In Thursday’s North American session, the spot price for one ounce of gold is $1290.67, up 0.49% on the day. On the release front, U.S. employment numbers were mixed. ADP nonfarm payrolls in November jumped to 271 thousand, crushing the estimate of 179 thousand. This was a sharp increase from the November reading of 179 thousand. Unemployment claims were higher than expected, climbing from 216 thousand to 231 thousand, above the estimate of 220 thousand. As well, ISM Manufacturing PMI dropped sharply to 54.1, down from 59.3 points in the previous release. This missed the estimate of 57.7 points. On Friday, the focus will again be on U.S. employment data, with the release of nonfarm payrolls and wage growth. Traders should treat these indicators as market-movers.

The volatility in the global stock markets, which were evident in much of December, has continued into the New Year. The markets are down sharply on Thursday, after Apple stunned investors when it lowered its quarterly sales forecast, saying it would fall well short of its estimate. The revenue warning, which was released after the close of North American markets on Wednesday, caught the markets by surprise. Apple blamed the downturn on weaker iPhone sales in China, which has been hit by an economic slowdown due to the ongoing tariff battle with the United States. Nervous investors responded by snapping up the safe-haven yen, which has soared this week. Gold is also a safe-haven asset, but has only posted modest gains this week. Still, with risk apprehension growing by the day, gold could resume its impressive December rally, when the metal climbed 4.9%. Gold has now pushed above $1290, its highest level since mid-June, and appears headed to the symbolic $1300 level.

Apple’s warning keeps pressure on stocks

With investors reading in their morning newspapers that equity markets suffered their worst year since 2008, risk apprehension remains high as we begin the New Year. However, one positive development in December was the announcement that U.S. and Chinese delegations are set to meet next week and tackle the trade issues that have sparked a serious rift between the world’s two largest economies. The talks are critical, as the U.S. has said that it will impose heavy tariffs on Chinese products on March 1, but agreed to suspend the move while talks are ongoing. Earlier in the week, President Trump said that ‘big progress’ had been made with China, but with the sides yet to meet face-to-face, the markets are not putting much stock in Trump’s remarks.

Currencies in apparent flash crash as risk sours

U.S dollar moves exaggerated in twilight zone hand-over

New year, same old markets

XAU/USD Fundamentals

Thursday (January 3)

  • 7:30 US Challenger Job Cuts. Actual 35.3%
  • 8:15 US ADP Non-Farm Employment Change. Estimate 179K. Actual 271K
  • 8:30 US Unemployment Claims. Estimate 220K. Actual 231K
  • 10:00 US ISM Manufacturing PMI. Estimate 57.7. Actual 54.1
  • 10:00 US ISM Manufacturing Prices. Estimate 57.9. Actual 54.9
  • All Day – US Total Vehicle Sales. Estimate 17.2M
  • 19:30 Japanese Final Manufacturing PMI. Estimate 52.4

Friday (January 4)

  • 8:30 US Average Hourly Earnings. Estimate 0.3%
  • 8:30 US Nonfarm Employment Change. Estimate 178K
  • 8:30 US Unemployment Rate. Estimate 3.7%
  • 10:15 US Fed Chair Powell Speaks

*All release times are EST

*Key events are in bold

XAU/USD for Thursday, January 3, 2019

XAU/USD January 3 at 12:30 EST

Open: 1284.34 High: 1292.35 Low: 1284.34 Close: 1290.67

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1236 1261 1284 1306 1326 1355

XAU/USD edged higher in the Asian session. The pair posted stronger gains in the European session but then retracted and gave up these gains. XAU/USD has shown limited movement in North American trade

  • 1284 is providing support
  • 1306 is the next resistance line
  • Current range: 1284 to 1306

Further levels in both directions:

  • Below: 1284, 1261, 1236 and 1220
  • Above: 1306, 1326 and 13550

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.