XAU/USD – Gold Edges Higher as US Jobs Report Matches Forecast

Gold has posted slight gains in the Wednesday session. In North American trade, the spot price for an ounce of gold is $1175.24. On the release front, it was another quiet day in the US. JOLTS Job Openings improved to 5.53 million, matching the forecast. On Thursday, the US releases unemployment claims, with the indicator expected to rise to 272 thousand.

Gold remains under pressure, as the metal has posted weekly declines for the past four weeks. On Monday, gold slipped to $1156, its lowest level since February. A strong US economy has not been good news for the safe-haven metal, as investors have regained an appetite for riskier assets. As well, it is virtually certain that the Federal Reserve will raise interest rates next week, which would mark the first hike by the Fed in a year. Expectations of a rate hike have sent the US dollar broadly higher at the expense of gold, as gold prices are inversely linked to interest rate levels.

The Federal Reserve holds its monthly policy meeting next week and the markets have priced a rate hike at 95 percent, most likely a quarter-point increase. This would mark the first hike by the Fed since last December, and sentiment towards the US dollar remains high. It will be interesting to see what happens early next year, with the Trump administration taking over in Washington. Trump has said he will increase government spending and cut taxes. This could lead to higher inflation levels, which means the Fed may need to adjust its monetary policy in 2017 based on the new administration’s economic policies.

XAU/USD Fundamentals

Wednesday (December 7)

• 10:00 US JOLTS Jobs Openings. Estimate 5.53M. Actual 5.53M
• 10:30 US Crude Oil Inventories. Estimate -1.4M. Estimate -2.4M
• 15:00 US Consumer Credit. Estimate 17.5B

Thursday (December 8)

• 8:30 US Unemployment Claims. Estimate 272K

*All release times are EST

*Key events are in bold

XAU/USD for Wednesday, December 7, 2016

XAU/USD December 7 at 13:50 EST

Open: 1169.32 High: 1180.31 Low: 1165.38 Close: 1175.24

XAU/USD Technical

• XAU/USD was flat in the Asian session. The pair has posted slight gains in the European and North American sessions
• 1174 is a fluid line. Currently, it is providing weak support
• 1205 is the next resistance line
• Current range: 1174 to 1205

Further levels in both directions:

• Below: 1174, 1146, 1130 and 1111
• Above: 1205, 1223 and 1245

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Wednesday session. Currently, long positions command a substantial majority (78%). This is indicative of trader bias towards XAU/USD breaking out and moving to higher levels.

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