XAU/USD – Gold Choppy Ahead of Nonfarm Payrolls Next

Gold is unchanged in the Thursday session. In North American trade, the metal is trading at $1298.95, just shy of the symbolic $1300 level. On the release front, unemployment claims surprised by climbing to 265 thousand, close to 3-month high. The estimate stood at 257 thousand. ISM Nonfarm Manufacturing PMI also disappointed, dropping to 54.8 points. This was short of the estimate of 56.2 points. On Friday, the US will release additional employment numbers, led by Nonfarm Employment Change. The indicator is expected to climb to 174 thousand.

There were no surprises from the Federal Reserve, which maintained the benchmark interest rate at 0.25 percent on Wednesday. However, the tone of the policy statement was slightly hawkish message with regard to a December hike. The Fed said that the economy has improved and the employment market remains strong. The Fed also noted that inflation was moving towards its target of 2 percent. Weak inflation has long been the Achilles heel of the US economy, but this obstacle to a rate hike appears to have been removed. The policy statement hinted strongly at a December hike, noting that “the case for an increase in the federal funds rate has continued to strengthen but decided, for the time being, to wait for some further evidence of continued progress toward its objectives”. Two FOMC members voted to raise rates immediately, Fed Presidents Esther George and Loretta Mester. With a December hike currently priced at over 70 percent, market sentiment towards the US dollar should remain positive and this could push gold prices lower.

XAU/USD Fundamentals

Thursday (November 3)

• 7:30 US Challenger Job Cuts. Actual -39.1%
• 8:30 US Unemployment Claims. Estimate 257K. Actual 265K
• 8:30 US Preliminary Nonfarm Productivity. Estimate 1.7%. Actual 3.1%
• 8:30 US Preliminary Unit Labor Costs. Estimate 1.6%. Actual 0.3%
• 9:45 US Final Services PMI. Estimate 54.8. Actual 54.8
• 10:00 US ISM Non-Manufacturing PMI. Estimate 56.2. Actual 54.8
• 10:00 US Factory Orders. Estimate 0.2%. Actual 0.3%
• 10:30 US Natural Gas Storage. Estimate 55B. Actual 54B

Upcoming Key Releases

Friday (November 4)

• 8:30 US Average Hourly Earnings. Estimate 0.3%
• 8:30 US Nonfarm Employment Change. Estimate 174K
• 8:30 US Unemployment Rate. Estimate 4.9%

*All release times are EDT

*Key events are in bold

XAU/USD for Thursday, November 3, 2016

XAU/USD November 3 at 12:30 EDT

Open: 1298.48 High: 1306.76 Low: 1285.52 Close: 1298.95

XAU/USD Technical

• XAU/USD posted slight gains in the Asian session. The pair retracted in European trade but has recovered in the North American session
• 1290 is providing support
• There is resistance at 1307
• Current range: 1290 to 1307

Further levels in both directions:

• Below: 1290, 1279, 1245 and 1223
• Above: 1307, 1331 and 1358

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Thursday session. Currently, long positions command a substantial majority (70%), indicative of trader bias towards XAU/USD continuing to move 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.