Gold Subdued, Markets Eye Services PMI

Gold is showing limited movement on Monday. In North American trade, gold is trading at a spot price of $1215.47 an ounce. On the release front, it’s a quiet start to the week. US Factory Orders slipped by 1.7 percent, lower than the forecast of a decline of 1.5 percent. On Tuesday, the US releases the ISM Non-Manufacturing PMI, with the estimate standing at 54.1 points.

The US economy continues to radiate strength, as underscored by a host of releases on Friday. Nonfarm Payrolls came in at 215 thousand, above the estimate of 205 thousand. The unemployment rate remained very low, edging up to 5.0%. Average Hourly Earnings posted a small gain of 0.3%, ahead of the estimate of 0.2%. There was more positive news from key manufacturing and consumer confidence indicators, as ISM Manufacturing PMI and UoM Consumer Sentiment Index both beat their estimates. These positive numbers indicate that the economy continues to move in the right direction, and helped the US dollar post gains against gold on Friday.

Last week, Janet Yellen gave a very dovish speech in New York, and the US dollar responded with broad losses. Yellen warned of risks to the US economy from uncertainty in the global markets and the slowdown in China, and poured cold water on speculation of an April rate hike. With the US economy in good shape, why did Yellen sound ultra-dovish in her comments? Yellen was likely directing her comments not just at the markets, but at Fed members who prior to her speech, issued hawkish statements concerning the timing of a rate hike. Some Fed officials went as far as calling on the Fed to hike rates at is April meeting. The contradictory messages coming out of Fed points to a split in the FOMC concerning monetary policy, although Yellen is likely to have the last word as far as Fed monetary policy. The Fed minutes from its last policy meeting will be released on Wednesday. Will the minutes show support for Yellen’s dovish outlook or disagreement amongst Fed policymakers? Analysts will be paying close attention to the minutes, looking for clues as to further rate projections. Traders should be prepared for some volatility after the release of the minutes.

XAU/USD Fundamentals

Monday (April 4)

  • 10:00 US Factory Orders. Estimate -1.5%. Actual -1.7%
  • 10:00 US Labor Market Conditions Index. Actual -2.1

Upcoming Key Events

Tuesday (April 5)

  • 10:00 US ISM Non-Manufacturing PMI. Estimate 54.1 points

*Key releases are highlighted in bold

*All release times are DST

XAU/USD for Monday, April 4, 2016

XAU/USD April 4 at 12:40 DST

Open: 1220.42 Low: 1214.58 High: 1222.70 Close: 1215.47

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1169 1191 1205 1232 1255 1279
  • 1205 is providing support
  • There is resistance at 1232
  • Current range: 1205 to 1232

Further levels in both directions:

  • Below: 1205, 1191 and 1169
  • Above: 1232, 1255, 1279 and 1303

OANDA’s Open Positions Ratio

XAU/USD ratio is showing long positions with a strong majority (59%), indicative of trader bias towards gold reversing its downward movement and climbing higher.

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.