Gold Edges Higher, Shrugs off Strong Inflation, Jobless Claim Reports

Gold has posted slight gains against the dollar in the Thursday session. Currently, spot gold is trading at $122.77 in the North American session.  On the release front, PPI climbed to 0.5%, above the estimate of 0.2%. Unemployment claims ticked down to 236 thousand, below the forecast of 245 of thousand. Despite the strong data, gold prices moved higher, boosted by market concerns over the growing political fallout after the firing of FBI director James Comey. On Friday, we could see stronger movement from gold, as the US releases retail sales, CPI and consumer confidence.

US numbers on Thursday were solid, as inflation and jobless claims reports both beat their estimates. PPI improved to 0.5%, its best gain in 3 months. There was more good news on the employment front, as unemployment claims edged down to 236 thousand, easily beating the estimate of 245 thousand. Will April consumer inflation numbers follow suit? The markets are counting on a strong showing, as CPI and Core CPI are expected to improve to 0.3% and 0.2%, respectively. If consumer inflation numbers beat expectations, it could increase the odds of a June rate hike and send gold prices lower.

There’s a major political crisis brewing in Washington, and the firestorm has frayed the nerves of investors and helped boost safe-haven gold. Democrats and Republicans alike were stunned following the firing of FBI director James Comey by President Trump. Comey had been conducting an investigation into possible collusion between Trump and Russia during the presidential campaign. 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 crisis could heat up further, with calls in Congress to appoint an independent investigator into Trump’s connections with Russia. Trump has not shied away from controversy early in his term, but has he gone one step to far? This latest controversy shows no signs of fading away anytime soon, and could delay Trump’s agenda of tax reform and increased fiscal spending.

XAU/USD Fundamentals

Thursday (May 11)

• 6:25 US FOMC Member Charles Dudley Speaks
• 8:30 US PPI. Estimate 0.2%. Actual 0.5%
• 8:30 US Unemployment Claims. Estimate 245K. Actual 236K
• 8:30 US Core PPI. Estimate 0.2%. Actual 0.4%
• 10:30 US Natural Gas Storage. Estimate 52B. Actual 45B
• 13:01 US 30-y Bond Auction

Friday (May 12)

• 8:30 US CPI. Estimate 0.3%
• 8:30 US Core CPI. Estimate 0.2%
• 8:30 US Core Retail Sales. Estimate 0.5%
• 8:30 US Retail Sales. Estimate 0.6%
• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 97.0

*All release times are EDT

*Key events are in bold

XAU/USD for Thursday, May 11, 2017

XAU/USD May 11 at 13:05 EST

Open: 1219.06 High: 1227.85 Low: 1217.00 Close: 1223.77

XAU/USD Technical

• XAU/USD posted small gains in the Asian and European sessions. The pair is steady in North American trade
• 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 has reversed directions and is showing slight movement towards long positions. Currently, long positions have a strong majority (73%), indicative of trader bias towards XAU/USD continuing to climb higher. 

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