XAU/USD – Gold Steady as Jobless Claims Match Forecast

Gold continues to have an uneventful week. In Thursday’s North American trade, the spot price for an ounce of gold is $1171.00. On the release front, it was a quiet day. On the release front, unemployment claims dipped to 258 thousand, matching the forecast. This was a strong improvement from the previous reading in 268 thousand. On Friday, the US releases UoM Consumer Sentiment Index. The markets are expecting the indicator to continue to improve in December, with an estimate of 94.3 points.

The Federal Reserve meets next week for its monthly policy meeting, the first after Donald Trump’s election as president. 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 market anticipation of a hike has translated into strong gains for the greenback. It will be interesting to see what happens early next year, with the Trump administration taking over in Washington. Trump has stated that he plans to increase government spending and cut taxes, which could lead to higher inflation levels. The Fed has indicated that it plans to raise rates gradually in 2017, but this could change once the new administration’s economic policies become clearer.

Gold has struggled of late, 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 given investors an appetite for riskier assets, which has hurt gold, a traditionally safe-haven asset. 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.

XAU/USD Fundamentals

Thursday (December 8)

• 13:30 US Unemployment Claims. Estimate 258K. Actual 258K
• 15:30 US Natural Gas Storage. Estimate -44B

Friday (December 9)

• 15:00 US Preliminary UoM Consumer Sentiment. Estimate 94.3

*All release times are EST

*Key events are in bold

XAU/USD for Thursday, December 8, 2016

XAU/USD December 8 at 13:20 EST

Open: 1174.91 High: 1178.68 Low: 1169.18 Close: 1171.00

XAU/USD Technical

• XAU/USD posted small losses in the Asian session. The pair was flat in the European session and has posted slight losses in North American trade
• 1146 is providing support
• 1174 remains fluid. Currently, it a weak resistance line.
• Current range: 1146 to 1174

Further levels in both directions:

• Below: 1146, 1130 and 1111
• Above: 1176, 1205, 1223 and 1245

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Thursday 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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