Gold Rally Hits 13-Month High

Gold continues to move upwards on Friday. In the North American session, gold is trading at $1353.40, up 0.32% on the day. On the release front, there are no major events, but we’ll hear from FOMC member Patrick Harker, as the markets look for clues about interest rate policy.

It’s been a strong September for gold prices, as the metal has gained 2.4 percent. The rally continued on Friday, as unemployment claims jumped to 298 thousand last week, the highest level since April 2015. This follows weak readings in July for nonfarm payrolls and wage growth. However, the jump in jobless claims can be attributed to Hurricane Harvey, which led to thousands of displaced workers in Texas filing for unemployment benefits. Unemployment claims could remain high in upcoming weeks, until flooded areas are able to get on their feet and rebuilding efforts pick up steam.

As a traditional safe-haven asset, gold tends to rise during geopolitical tensions. The global hot spot in recent weeks has been the Korean peninsula. North Korea recently tested a hydrogen bomb, sending alarm bells off in the the US, Japan and South Korea. As the crisis has worsened, nervous investors have snapped up gold. If the situation worsens, it’s a safe bet that gold prices will continue to move higher. On Friday, gold has touched a high of $1357.62, its highest level since August 2016.

Inflation has been the Achilles Hill in the US economy for months, and this was reiterated in the Federal Reserve Beige Book report on Wednesday. The survey found that wage pressure remains limited, despite the fact that many businesses cannot fill job openings. The lack of wage growth has been an important factor in ongoing weak inflation levels, despite moderate economic growth and a very strong labor market. Weak inflation has hampered the Fed’s plans to raise interest rates a third time this year, and the odds of a December hike have dipped to just 31%, as the markets are increasingly doubtful that the Fed will make a move before next year.

XAU/USD Fundamentals

Friday (September 8)

• 8:45 US FOMC Member Patrick Harker Speaks
• 10:00 US Final Wholesale Inventories. Estimate 0.4%
• 15:00 US Consumer Credit. Estimate 15.1B

*All release times are GMT

*Key events are in bold

XAU/USD for Friday, September 8, 2017

XAU/USD September 8 at 8:10 EST

Open: 1349.06 High: 1357.62 Low: 1347.50 Close: 1353.40

XAU/USD Technical

• XAU/USD posted gains in the Asian session and is steady in the European session
• 1337 is providing support
• 1367 is the next resistance line
• Current range: 1337 to 1367

Further levels in both directions:

• Below: 1337, 1307, 1285 and 1260
• Above: 1367, 1392 and 1416

OANDA’s Open Positions Ratio

XAU/USD remains unchanged this week. Currently, short and long positions are evenly split, indicative of a lack of trader bias as to what direction XAU/USD will take next. 

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