Gold rally takes breather, U.S job numbers loom

Gold has ticked lower in the Wednesday session. In North American trade, the spot price for one ounce of gold is $1237.47, down 0.10% on the day. In economic news, there are no major events. On Thursday, the focus will be on U.S. employment data, with the release of ADP nonfarm payrolls and unemployment claims. The U.S. will also release ISM Non-Manufacturing PMI.

It’s been a good week for gold, which has posted gains of 1.2 percent. The catalyst for higher gold prices has been the response to the weekend meeting between President Trump and Chinese President Xi Jinping at the G-20 summit. Global stock markets climbed sharply after Trump suspended his threat to raise tariffs on Chinese products as of December 1. However, the optimism proved to be short-lived, as investors are asking if the 90-day truce is simply a pause in the trade war between the world’s two largest economies. Investor risk appetite softened on Tuesday, and safe-haven gold was in strong demand, as gold touched a high of $1239, its highest level since October 22.

Now that there is a respite in the tariff war, can the U.S. and China narrow their differences in just a few weeks? The U.S. and China, including repeated charges by the U.S. that China is engaged in theft of U.S. intellectual property. The markets have been very sensitive to the trade dispute, and the upcoming negotiations between the U.S. and China, with the likely ups-and-downs, promise to have a significant effect on the direction of USD/JPY.

The ‘tariff truce’ between the U.S and China is welcome news after months of an escalating trade war, but the two super-economies remain far apart on a number of issues, including U.S. accusations that China has been stealing U.S. intellectual property. All indications are that reaching a deal will be difficult. The markets have been sensitive to development in the tariff tussle between the countries, and the likely ups-and-downs in the upcoming negotiations will likely affect the movement of gold prices in the coming weeks.

XAU/USD Fundamentals

Wednesday (December 5)

  • All Day – OPEC-JMMC Meetings
  • 14:00 US Beige Book
  • 20:15 US FOMC Member Quarles Speaks

Thursday (December 6)

  • All Day – OPEC Meetings
  • 8:15 US ADP Nonfarm Employment Change. Estimate 196K
  • 8:30 US Unemployment Claims. Estimate 226K
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 59.2
  • 18:30 Japanese Household Spending. Estimate 1.2%
  • 18:30 US FOMC Member Williams Speaks
  • 18:45 US Federal Reserve Chair Powell Speaks

*All release times are EST

*Key events are in bold

XAU/USD for Wednesday, December 5, 2018

XAU/USD December 5 at 12:10 EST

Open: 1238.63 High: 1239.39 Low: 1233.42 Close: 1237.47

XAU/USD Technical

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

XAU/USD posted losses in the Asian session but recovered most of these losses in the European session. The pair is flat in North American trade

  • 1236 is a weak support line. It was tested earlier in the day
  • 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 and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.