Gold Steady, Markets Eye US Jobless Claims

Gold has posted slight gains on Wednesday. The metal is trading at a spot price of $1273.36 an ounce in the North American session. On the release front, EIA Crude Oil Inventories posted a sharp decline of 3.4 million barrels, much weaker than expectations. On Thursday, we’ll get a look at US Unemployment Claims, with the estimate expected to edge higher to 277 thousand.

Gold investors continue to look for hints as to the Federal Reserve’s plans regarding interest rates. In its April policy statement, the Fed didn’t raise rates, but the message to the markets with regard to the US economy was one of cautious optimism. The statement noted continuing improvement in the labor market but added that it was keeping a watchful eye on low inflation levels. The Fed statement appeared to leave the open to a June hike, but last week’s soft payrolls report has greatly reduced the likelihood of a June move. On Friday, New York Fed president William Dudley said he remains confident that the Fed could raise rates as much as twice this year, but many analysts are skeptical if the Fed will raise rates before 2017. Economic releases, especially employment and inflation indicators, will be major factors as the Fed must decide whether to press the rate trigger in June. Gold is sensitive to interest rate moves, so any hints about a June hike could push gold prices downwards.

US employment indicators appear to be taking one step forward, one step backward. On Tuesday, JOLT Job Openings looked sharp in April, jumping to 5.76 million. This figure was much stronger than the estimate of 5.56 million. However, last week’s host of employment numbers were a mix, which predictably has raised concerns about the strength of the US labor market. Last week, Nonfarm Payrolls looked awful, as the key indicator slid to just 160 thousand, well short of the forecast of 203 thousand. This marked the lowest reading in seven months. ADP Nonfarm Payrolls and Unemployment Claims both missed their estimates. In other releases on Friday, wage levels showed no change, as Average Hourly Earnings posted a weak gain of 0.3%. The unemployment rate remained steady at 5.0%.

XAU/USD Fundamentals

Wednesday (May 11)

  • 10:30 US Crude Oil Inventories. Estimate +0.7M. Actual -3.4M
  • 13:01 US 10-year Bond Auction. 
  • 14:00 US Federal Budget Balance. Estimate 116.2B

Upcoming Key Events

Thursday (May 12)

  • 8:30 US Unemployment Claims. Estimate 277K

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Wednesday, May 11, 2016

XAU/USD May 11 at 11:45 EDT

Open: 1264.97 Low: 1264.86 High: 1209.16 Close: 1273.36

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1207 1232 1255 1279 1303 1324
  • XAU/USD posted small gains in the Asian and European sessions. The pair has reversed directions in North American trade
  • 1255 is providing support
  • There is weak resistance at 1279
  • Current range: 1255 to 1279

Further levels in both directions:

  • Below: 1255, 1232 and 1207
  • Above: 1279, 1303, 1324 and 1345

OANDA’s Open Positions Ratio

XAU/USD ratio is showing little movement on Wednesday. Long positions have a strong majority (62%). This is indicative of trader bias towards XAU/USD reversing directions and climbing to higher levels.

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.