Gold Dips Below $1200, US Nonfarm Payrolls Loom

Gold continues to slide this week and has lost more ground in the Thursday session. In North American trade, the spot price for one ounce is $1203.60. On the release front, unemployment claims climbed to 243 thousand, higher than the forecast of 239 thousand. On Friday, employment numbers will again be in focus, as the US releases three key indicators – Nonfarm Payrolls, Average Hourly Earnings and the unemployment rate. Traders should be prepared for some volatility in gold prices during the North American session.

Gold prices are down sharply this week, as the metal has fallen 2.6 percent. Gold prices are currently at their lowest since February 1, as an expected rate hike from the Fed next week continues to whet investors’ appetite for risk. Gold enjoyed strong gains in February, only to see this wiped out in the first week of March. If key employment data is strong on Friday, we could see gold respond negatively and drop below the symbolic $1200 level.

After raising rates in December, the Fed appears ready to make a March move. The odds of a March hike continue to climb, and are currently at 88% percent, according to the CME Group. Fed policymakers have been dropping hints of a March move, and a red-hot labor market and higher inflation levels present further arguments in favor higher rates. Earlier in the year, the Fed had said that it wanted to wait until it had a clearer idea of President Trump’s economic policy before it tightened monetary policy. However, Trump has not backed up his promises to reform the tax code and increase fiscal spending with any details. Some Fed policymakers wanted to raise rates earlier this year, so Fed Chair Yellen is under pressure to make a move, and it appears virtually certain that the Fed will raise rates by a quarter-point on March 15.

XAU/USD Fundamentals

Thursday (March 9)

• 7:30 US Challenger Job Cuts. Actual -40.0%
• 8:30 US Unemployment Claims. Estimate 239K. Actual 243K
• 8:30 US Import Prices. Estimate 0.1%. Actual 0.2%
• 10:30 US Natural Gas Storage. Estimate -59B
• 13:01 US 30-y Bond Auction

Upcoming Key Events

Friday (March 10)

• 8:30 US Average Hourly Earnings. Estimate 0.3%
• 8:30 US Nonfarm Employment Change. Estimate 185K
• 8:30 US Unemployment Rate. Estimate 4.7%

*All release times are GMT

*Key events are in bold

XAU/USD for Thursday, March 9, 2017

XAU/USD March 9 at 13:45 EST

Open: 1208.30 High: 1209.40 Low: 1201.43 Close: 1203.60

XAU/USD Technical

• XAU/USD edged lower in the Asian session. The pair posted slight gains in the European session but has retracted in North American trade
• 1199 is a weak support level
• 1232 is the next line of resistance
• Current range: 1199 to 1232

Further levels in both directions:

• Below: 1199, 1174 and 1146
• Above: 1232, 1260, 1285 and 1307

OANDA’s Open Positions Ratio

XAU/USD ratio remains unchanged this week. Currently, long positions have a majority (66%), indicative of trader bias towards XAU/USD reversing directions and moving upwards.

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