Gold Unchanged Ahead of US Inflation, Jobless Claims

Gold has taken a pause from recent losses, as it trades quietly in the Wednesday session. Currently, spot gold is trading at $1221.39 in the North American session. There are no major releases in the US on the schedule. In the US, there are two key releases on Thursday – PPI and unemployment claims.

Donald Trump has been embroiled in a number of controversies in his short presidency, but the political earthquake he has now stirred could become political quicksand for the new president. Trump abruptly fired FBI director James Comey on Tuesday, stunning lawmakers on both sides of the aisle. Comey, who has been conducting an investigation into possible collusion between Trump and Russia during the presidential campaign, clearly has been a thorn in Trump’s side. The White House has claimed that it fired Comey over his handling of an email scandal involving Hillary Clinton, but the move has been roundly condemned by the Democrats, and some key Republicans have also voiced opposition as well. The firestorm could heat up further, with calls in Congress to appoint a special prosecutor into Trump’s connections with Russia. Has Trump gone one step to far? This latest controversy could cause some jitters among investors and boost safe-haven gold.

Gold prices have dropped sharply in May, sliding 4.2 percent. The metal lost ground last week following the Federal Reserve rate statement, which was more hawkish than expected. Although the US economy had some hiccups in the first quarter, Fed policymakers chose to focus on the positive, and this immediately increased the likelihood of a June rate hike. This triggered a negative reaction from gold, which trades inversely to interest rate moves. The odds of a June hike have moved even higher this week, following strong US employment numbers in April. There is a possibility that Fed could raise rates three more times in 2017, but as things stand now, two more moves is the likely scenario. Currently, the likelihood of a June rate hike stands at 87%, according to the CME Group.

XAU/USD Fundamentals

Wednesday (May 10)

• 8:30 US Import Prices. Estimate 0.2%. Actual 0.5%
• 10:30 US Crude Oil Inventories. Estimate -2.0M
• 13:01 US 10-y Bond Auction
• 14:00 US Federal Budget Balance. Estimate 175.0B

Thursday (May 11)

• 8:30 US PPI. Estimate 0.2%
• 8:30 US Unemployment Claims. Estimate 245K

*All release times are EDT

*Key events are in bold

XAU/USD for Wednesday, May 10, 2017

XAU/USD May 10 at 12:10 EST

Open: 1220.87 High: 1221.81 Low: 1220.29 Close: 1221.39

XAU/USD Technical

• XAU/USD has been marked by little movement in the Wednesday session
• 1199 is providing support
• 1232 is the next resistance line
• Current range: 1199 to 1232

Further levels in both directions:

• Below: 1199, 1175 and 1146
• Above: 1232, 1260, 1285 and 1307

OANDA’s Open Positions Ratio

XAU/USD ratio is showing slight losses in long positions. Currently, long positions have a strong majority (70%), indicative of trader bias towards XAU/USD breaking out and moving to higher levels. 

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