XAU/USD – Gold Dips, Markets Eye Consumer Confidence

Gold has posted losses on Thursday, erasing the gains seen in the Wednesday session. In North American trade, the spot price for one ounce is $1232.86. In economic news, unemployment claims dipped fell to 234 thousand, well short of the forecast of 249 thousand. On Friday, the major event in the US is UoM Consumer Sentiment,with an estimate of 97.9 points.

Will the Trump effect, which took America by storm, cross over to Europe? There is increasing uneasiness in the markets as populist, far-right parties are gaining support in France, the Netherlands and Germany,  threatening the old order. First up is France – the country goes to the polls in April, and Marie Le Pen, the far-right candidate in the ring, is leading in the polls ahead of the first round of voting. Le Pen is not only a strong supporter of Donald Trump, but is hoping to pull off a Trump-style upset win. Although Le Pen is not expected to win the presidency, neither was Trump. Le Pen wants to take France out of the Eurozone and has promised a referendum on France’s membership out of the European Union.

During the US election campaign, Donald Trump hammered away at the ills of the US economy, but was short on specifics as far as remedies. However, he did promise a significant fiscal boost through infrastructure spending and tax cuts. This led to a post-election euphoria in the markets and boosted the US dollar. Fast forward to February, and optimism has been replaced by caution and unease, as Trump continues to entangle himself in controversy, both with US trading partners and at home, with the media and Supreme Court. The markets are disappointed that Trump has not unveiled an economic plan or blueprint, limiting himself to protectionist rhetoric which has sent alarm bells ringing worldwide. On Wednesday, Goldman Sachs forecast that the administration won’t implement tax reform or infrastructure spending before 2018. If so, markets may have to wait a while longer before Trump puts an economy policy in place.

XAU/USD Fundamentals

Thursday (February 9)

• 8:30 US Unemployment Claims. Estimate 249K. Actual 234K
• 10:00 US Final Wholesale Inventories. Estimate 1.0%
• 10:30 US Natural Gas Storage. Estimate -155B
• 13:01 US 30-y Bond Auction
• 13:10 US FOMC Member Charles Evans Speaks

Friday (February 10)

• 10:00 US UoM Consumer Sentiment. Estimate 97.9

*All release times are EST

*Key events are in bold

XAU/USD for Thursday, February 9, 2017

XAU/USD February 9 at 12:35 EST

Open: 1239.77 High: 1244.54 Low: 1230.45 Close: 1232.86

XAU/USD Technical

• XAU/USD was flat in the Asian and European sessions. The pair has posted losses in North American trade
• 1232 was tested in support earlier and is a weak line
• 1260 is a strong resistance line
• Current range: 1232 to 1260

Further levels in both directions:

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

OANDA’s Open Positions Ratio

XAU/USD ratio is showing little movement in the Thursday session. Currently, long positions with a strong majority (64%), indicative of trader bias towards XAU/USD reversing directions and moving to higher levels.

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