XAU/USD – Gold Gains Ground as Jobless Claims Rise

Gold has posted moderate gains on Thursday. In North American trade, the spot price for one ounce is $1238.46. In economic news, key indicators beat expectations. Unemployment claims rose to 239 thousand, up from 234 thousand a week earlier. Still. this beat the forecast of 243 thousand. The was excellent news in the manufacturing sector, as the Philly Fed Manufacturing Index soared to 43.3 points, crushing the estimate of 18.5 points. Finally, Building Permits improved to 1.29 million, above the forecast of 1.23 million.

Federal Reserve Chair Janet Yellen was on center stage this week, as she made her semi-annual appearance before Congress. In her testimony, Yellen was upbeat about the US economy. She noted that inflation is moving towards the Fed’s 2 percent target, the labor market remains red-hot and consumer spending is strong. Yellen’s next challenge can be considered an enviable task – when is the appropriate time to raise rates in order to cool down the economy – in June or as early as March? A rate hike appears to be just a question of time, as Yellen warned that “waiting too long to remove accommodation would be unwise”. If the US economy stays on track in 2017, analysts expect two or three small rate hikes. At the same time, the Fed needs to take into account the economic stance of the new administration, which remains unclear. President Trump has promised to outline a tax reform plan in a few weeks, but has left the Fed and the markets in the dark regarding economic policy. Unless the economy takes an unexpected turn downwards, it’s very likely that the Fed will press the rate trigger by June.

XAU/USD Fundamentals

Thursday (February 16)

• 00:15 US FOMC William Dudley Speech
• 8:30 US Building Permits. Estimate 1.23M. Actual 1.29M
• 8:30 US Philly Fed Manufacturing Index. Estimate 18.5 points. Actual 43.3 points
• 8:30 US Unemployment Claims. Estimate 243K. Actual 239K
• 8:30 US Housing Starts. Estimate 1.23M. Actual 1.25M
• 10:30 US Natural Gas Storage. Estimate -130B. Actual -114B

*All release times are EST

*Key events are in bold

XAU/USD for Thursday, February 16, 2017

XAU/USD February 16 at 13:00 EST

Open: 1232.89 High: 1242.43 Low: 1232.12 Close: 1238.46

XAU/USD Technical

• XAU/USD was flat in the Asian session. The pair has posted small gains in the European and North American sessions
• 1232 is providing support
• 1260 is the next resistance line
• Current range: 1232 to 1260

Further levels in both directions:

• Below: 1232, 1199, 1174 and 1146
• Above: 1260, 1285 and 1307

OANDA’s Open Positions Ratio

XAU/USD ratio is almost unchanged. Currently, long positions command a majority (64%), indicative of trader bias towards XAU/USD continuing to move to higher levels.

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