Gold Rally Continues on Holiday Monday

After an uneventful week, gold has started the week with gains. In Monday’s North American trade, the spot price for an ounce of gold is $1280.61, up 0.37% on the day. There are no US releases today, and banks are closed for Columbus Day.

Gold prices moved higher on Friday, as Nonfarm Employment Change shocked the markets by wiping out 33 thousand jobs in September, much weaker than the estimate of a gain of 85 thousand. The dismal release was a result of the severe impact of hurricanes Harvey and Irma, which hit the US in late August and early September. The two storms caused $150-200 billion in damage and also took a toll on the employment market, although the labor market is expected to rebound as the recovery effort intensifies. There was better news from wage growth, which accelerated to 0.5%, above the estimate of 0.3%. This reading is pointing to stronger inflationary pressure, although we’ll have to wait for additional inflation indicators, such as CPI, to gauge inflation is moving higher. As well, the unemployment rate fell from to 4.2% in September, down from 4.4% a month earlier.

Early in the year, the Federal Reserve broadly hinted that it would raise rates three or four times in 2017, and a third hike in December now appears very likely. Fed futures are currently priced in at 91%, which is remarkable, considering that only a month ago, the odds of a December increase were just 31 percent. A strong US economy has helped raise the odds, but the primary reason for the huge shift in market sentiment can be attributed to the Fed policymakers that have come out in support of a rate hike, notably Fed Chair Janet Yellen. The lack of inflation remains the most significant impediment to raising rates, but Yellen and other FOMC members have insisted that strong economic conditions will lead to higher inflation levels.

XAU/USD Fundamentals

Monday (October 9)

• There are no US events

*All release times are GMT

*Key events are in bold

XAU/USD for Monday, October 9, 2017

XAU/USD October 9 at 11:45 EST

Open: 1275.82 High: 1285.34 Low: 1275.17 Close: 1280.61

XAU/USD Technical

• XAU/USD inched higher in the Asian session. The pair gained ground in the European session and has edged lower in North American trade
• 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

In the Monday session, XAU/USD is showing long positions with a majority (71%), indicative of trader bias towards XAU/USD continuing to move to higher ground.

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