Gold dips as investors cheered by superb NFP

Gold has recorded losses in the Monday session, continuing the trend seen on Friday. In North American trade, the spot price for one ounce of gold is $1313.95, down 0.29% on the day. There are no major U.S. events on the schedule. We’ll get a look at factory orders, which is expected to rebound with a gain of 0.3%, after a decline of 2.1% in the previous release. On Tuesday, the key event is ISM Non-manufacturing PMI.

Gold prices enjoyed another strong week, with gains of 1.1%. On Thursday, gold touched a high of $1326, its highest level since the first week of April 2018. The metal has taken full advantage of the decidedly dovish stance of the Federal Reserve. This stands in sharp contrast to the aggressive Fed we saw last year, when policymakers hiked interest rates four times, in response to a red-hot U.S. economy. However, the Fed has eyed the ongoing U.S.-China trade spat and slower growth in the U.S. with concern, and the Fed is now projecting just two rate hikes this year. The markets have gone even further, pricing in no rate hikes until 2020. Fed Chair Jerome Powell reiterated the Fed’s dovish stance after last week’s policy meeting, saying the central bank would be “patient” regarding future rate hikes.

Gold prices dropped on Friday, after the U.S. posted mixed employment numbers. Nonfarm payrolls sparkled, with a reading of 304 thousand, crushing the estimate of 165 thousand. This was the second score above the 300-thousand mark for a second successive month. However, wage growth was a disappointment, dropping from 0.4% to 0.1%. The upbeat nonfarm payroll report maintained investor appetite for risk, sending gold prices lower.

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XAU/USD Fundamentals

Monday (February 4)

  • 15:00 US Factory Orders. Estimate 0.3%
  • Tentative – US Loan Officer Survey

Tuesday (February 5)

  • 15:00 US ISM Non-Manufacturing PMI. Estimate 57.0

*All release times are EST

*Key events are in bold

XAU/USD for Monday, February 4, 2019

XAU/USD February 4 at 11:10 EST

Open: 1317.80 High: 1319.05 Low: 1308.71 Close: 1313.95

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1261 1284 1306 1326 1344 1365

XAU/USD posted losses in the Asian session and ticked lower in the European session. The pair is has posted small gains in North American trade

  • 1306 is providing support
  • 1326 is the next resistance line
  • Current range: 1306 to 1326

Further levels in both directions:

  • Below: 1306, 1284, 1261 and 1236
  • Above: 1326, 1344 and 1365

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.