Gold Edges Lower as ADP Nonfarm Payrolls Sparkles

Gold prices have dipped lower in the Thursday session. In North American trade, spot gold is trading at $1263.22 an ounce. It’s a very busy day on the release front. US employment numbers were mixed, as the ADP Nonfarm Employment Changed jumped to 253 thousand, easily beating the estimate of 181 thousand. Unemployment claims was softer than expected, climbing to 248 thousand. The markets had forecast a reading of 239 thousand. On the manufacturing front, the ISM Manufacturing PMI was almost unchanged at 54.9, which was slightly above the estimate of 54.7 points. On Friday, employment data will again be in the spotlight, as the US  releases three key events – the official Nonfarm Payrolls report, wage growth, and the unemployment rate. Traders should be prepared for some movement in gold prices in the North American session, following the release of the these indicators.

Although the US economy slowed down in the first quarter of 2017, the markets are confident that the Federal Reserve remains on track to raise interest rates at its policy meeting on June 14. with the odds of a 0.25% hike priced in at 89%. As for the second half of 2017, the likelihood of rate move is significantly lower. The odds for a September rate stand at just 26%, with the markets skeptical as to whether the Fed will make further moves this year if inflation remains below the Fed target. Low inflation levels have Janet Yellen and her colleagues scratching their heads, as a red-hot labor market, with an unemployment rate at just 4.4%, has failed to trigger higher inflation levels. With the next rate decision just less than two weeks away, the markets will be glued to any comments from Fed policy makers, and any clues from the Fed about its rate plans could have a significant impact on gold prices.

XAU/USD Fundamentals

Thursday (June 1)

• 7:30 US Challenger Job Cuts. Actual 71.4%
• 8:15 US ADP Nonfarm Employment Change. Estimate 181K. Actual 253K
• 8:30 US Unemployment Claims. Estimate 239K. Actual 248K
• 9:45 US Final Manufacturing PMI. Estimate 52.5. Actual
• 10:00 US ISM Manufacturing PMI. Estimate 54.7. Actual 54.9
• 10:00 US Construction Spending. Estimate 0.5%. Actual -1.4%
• 10:00 US ISM Manufacturing Prices. Estimate 67.0. Actual 60.5
• 10:30 US Natural Gas Storage. Estimate 78B
• 11:00 US Crude Oil Inventories. Estimate -2.7M
• All Day – US Total Vehicle Sales. Estimate 17.0M

Friday (June 2)

• 8:30 US Average Hourly Earnings. Estimate 0.2%
• 8:30 US Nonfarm Employment Change. Estimate 186K
• 8:30 US Unemployment Rate. Estimate 4.4%

*All release times are EDT

*Key events are in bold

XAU/USD for Thursday, June 1, 2017

XAU/USD June 1 at 10:20 EST

Open: 1268.81 High: 1270.39 Low: 1261.52 Close: 1263.22

XAU/USD Technical

• XAU/USD has ticked lower in the Asian and European sessions. The pair remains under pressure in the North American session
• 1260 is a weak support level
• 1285 is the next resistance line
• Current range: 1260 to 1285

Further levels in both directions:

• Below: 1260, 1232, 1199 and 1175
• Above: 1285, 1307 and 1337

OANDA’s Open Positions Ratio

In the Thursday session, XAU/USD ratio is showing long positions with a strong majority (65%). This is indicative of XAU/USD reversing directions and moving to higher levels. 

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