Gold Slips as US Manufacturing PMI Beats Estimate

Gold has reversed directions on Tuesday, trading at a spot price of $1230.44 per ounce in the North American session. On the release front, ISM Manufacturing PMI came in at 49.5 points, within expectations. On Wednesday, the US releases ADP Non-Farm Employment Change, ahead of Nonfarm Payrolls on Friday.

Recent US housing numbers are raising concerns. Housing Starts and Building Applications both slipped in January, and New Home Sales and Pending Sales followed suit, missing expectations. Activity in the housing sector is closely monitored by analysts, as a decrease in home building can have a negative impact on other sectors of the economy. The markets will next shift focus to the employment front, starting with the ADP Nonfarm Payrolls. The estimate stands at 185 thousand, much lower than the previous release of 205 thousand.

The US economy has been grappling with a downturn in global demand, which has taken its toll on the manufacturing sector. A strong US dollar, which has posted broad gains in recent months, has only exacerbated the situation. However, recent manufacturing releases are raising hopes that the sector is stabilizing and that better days lie ahead. ISM Manufacturing PMI improved to 49. 5 points, a slight contraction, but above the estimate of 48.5 points. Late last week, durable goods reports were much stronger than expected. Core Durable Goods rose 1.8%, crushing the estimate of 0.2%. This marked the key indicator’s strongest showing since March 2014. Durable Goods Orders followed suit with a sharp rise of 4.9%, rebounding from the previous reading of -5.1%. This was stronger than the estimate of 3.0%.

XAU/USD Fundamentals

Tuesday (March 1)

• 9:45 US Final Manufacturing PMI. Estimate 51.0 points. Actual 51.3 points
• 10:00 US ISM Manufacturing PMI. Estimate 48.5 points. Actual 49.5 points
• 10:00 US Construction Spending. Estimate 0.5%. Actual 1.5%
• 10:00 US ISM Manufacturing Prices. Estimate 35.5 points. Actual 38.5 points
• 10:00 US IBD/TIPP Economic Optimism. Actual 46.8 points
• All Day – US Total Vehicles. Estimate 17.6M

Upcoming Key Events

Wednesday (March 2)

• 8:15 US ADP Non-Farm Employment Change. Estimate 185K

*Key releases are highlighted in bold

*All release times are EST

XAU/USD for Tuesday, March 1, 2016

XAU/USD March 1 at 12:15 EST

Open: 1240.41 Low: 1248.57 High: 1226.50 Close: 1230.44

XAU/USD Technical

• XAU/USD posted gains in the Asian session. The pair has been choppy in the European and North American sessions.
• 1232 remains busy and has switched to resistance following losses by the pair on Tuesday
• 1205 is providing support
• Current range: 1205 to 1232

Further levels in both directions:

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

OANDA’s Open Positions Ratio

XAU/USD ratio remains unchanged this week. Long positions retain a slight majority (53%), which is indicative of trader bias towards gold reversing directions and moving to higher levels.

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.