Gold Dips as Jobless Claims Beat Estimate, GDP Looms

Gold has posted losses on Thursday, erasing the gains which marked Wednesday trade. In North American trade, the spot price for an ounce of gold is $1272.78, down 0.37% on the day. On the release front, unemployment claims climbed to 233 thousand, just below the forecast of 235 thousand. As well, Pending Home Sales rebounded, coming in at 0.0%. The indicator has struggled, recording five declines in the past 6 months.

It’s report card day for the US economy on Friday, with the release of Advance GDP. The markets are forecasting a gain of 2.5%, after Preliminary GDP posted a sharp gain of 3.0%. US economic numbers remain strong, and the labor market is close to capacity. At the same time, inflation has not moved higher, and wage growth has been weaker than expected. Despite the lack of inflation, the odds of a December rate hike have soared in recent weeks, with the odds of a rate raise at 96%, according to CME FedWatch.

The White House has yet to make a decision on the new Federal Reserve chair, but the latest media reports are that John Taylor or Jerome Powell will get the nod, replacing Janet Yellen. The choice of the new chair could have significant ramifications for interest rate policy as well as the US dollar. Powell is expected to follow Yellen’s stance of incremental rate increases, while Taylor is a proponent of much higher rate levels, which could propel the dollar upwards. President Trump is expected to make his choice before embarking on a tour of Asia on November 3, so traders should be prepared for an announcement next week.

XAU/USD Fundamentals

Thursday (October 26)

• 8:30 US Unemployment Claims. 235K. Actual 233K
• 8:30 US Goods Trade Balance. Estimate -63.8B. Actual -64.1B
• 8:30 US Preliminary Wholesale Inventories. Estimate 0.4%. Actual 0.3%
• 10:00 US Pending Home Sales. Estimate 0.2%. Actual 0.0%
• 10:30 US Natural Gas Storage. Estimate 61B. Actual 64B

Friday (October 27)

• 8:30 US Advance GDP. Estimate 2.5%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 100.7

*All release times are GMT

*Key events are in bold

XAU/USD for Thursday, October 26, 2017

XAU/USD October 26 at 12:20 EST

Open: 1277.52 High: 1282.59 Low: 1271.95 Close: 1272.78

XAU/USD Technical

• XAU/USD edged higher in the Asian session but retracted in European trade. The pair continues to lose ground in North American session
• 1260 is providing support
• 1285 is the next resistance line
• Current range: 1260 to 1285

Further levels in both directions:

• Below: 1260, 1240 and 1213
• Above: 1285, 1307, 1337 and 1367

OANDA’s Open Positions Ratio

XAU/USD ratio is showing little movement in the Thursday session. Currently, long positions have a majority (68%), indicative of trader bias towards XAU/USD reversing directions and moving to higher ground.

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.