XAU/USD – Gold Punches Above $1200 as Trump Speech Disappoints

Gold continues to move higher and has posted gains in the Thursday session. In North American trade, the spot price for one ounce is $1200.51. The metal has gained 4.3% since January 1, and has crossed above the symbolic $1200 level for the first time since November 23. On the release front, unemployment claims were sharp, coming in at 247 thousand. This easily beat the estimate of 266 thousand. The US releases key retail sales and consumer confidence reports on Friday, so we could see some movement from gold in the North American session.

The US labor market continues to impress, as unemployment claims beat expectations for a second straight week. However, it should be noted that unemployment rolls may be skewed around the Christmas holiday season, so analysts are not reading too much into these unusually low releases. Still, 4-week averages for unemployment claims remain at very low levels, as the employment markets remains close to capacity as a strong US economy had led to demand for more and more workers.

Donald Trump’s knack of affecting the markets continued on Wednesday, following the president-elect’s baffling press conference from the Trump Towers in New York City. With just over a week left until Inauguration Day, the markets were hoping that Trump would provide some details of his economic policy, which remains unclear. There was an air of anticipation ahead of the press conference, but the event quickly turned into a spectacle rather than a platform outlying the Trump’s plans as president. Trump used the event to again attack the media and intelligence services for releasing damaging material on him, and also presented his plan to avoid business conflicts while in office. The markets were clearly disappointed with the theatrics, and the US dollar was broadly lower. This translated into a gain for gold prices, which appears headed for its sixth winning session in the past seven days.

Lack of Details Unwind the Trumpflation Trade

XAU/USD Fundamentals

Thursday (January 12)

• 8:30 US Unemployment Claims. Estimate 266K. Actual 247K
• 8:30 US FOMC Member Charles Evans Speech
• 8:30 US FOMC Member Patrick Harker Speech
• 8:30 US Import Prices. Estimate 0.8%. Actual 0.4%
• 10:30 US Natural Gas Storage. Estimate -150B. Actual -151B
• 13:01 US 30-year Bond Auction
• 14:00 US Federal Budget Balance. Estimate 21.0B
• 19:00 Federal Reserve Chair Janet Yellen Speech

Friday (January 13)

• 8:30 US Core Retail Sales. Estimate 0.5%
• 8:30 US PPI. Estimate 0.1%
• 8:30 US Retail Sales. Estimate 0.5%
• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 98.6

*All release times are EST

* Key events are in bold

XAU/USD for Thursday, January 12, 2017

XAU/USD January 11 at 12:50 EST

Open: 1193.60 High: 1206.40 Low: 1192.46 Close: 1200.51

XAU/USD Technical

• XAU/USD posted slight gains in the Asian and European sessions. The pair is steady in North American trade
• 1199 is fluid. Currently, its is providing weak support
• 1232 is the weak resistance line
• Current range: 1199 to 1232

Further levels in both directions:

• Below: 1199, 1174, 1146 and 1130
• Above: 1232, 1260 and 1285

OANDA’s Open Positions Ratio

XAU/USD ratio is showing movement towards short positions. Still, long positions command a strong majority (71%), indicative of trader bias towards XAU/USD continuing to climb to higher levels.

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