XAU/USD – Gold Steady as US Jobless Claims Within Expectations

Gold has posted small gains on Thursday, as the metal trades at $1313.32 in the North American session. On the release front, unemployment claims came in at 263 thousand, within expectations. However, the US ISM Manufacturing PMI posted a weak reading of 49.4 points, short of the estimate. On Friday, the US releases three key employment indicators – the unemployment rate, Average Hourly Earnings and the Nonfarm Employment Change.

US numbers were mixed on Thursday, but have otherwise had a strong week. Unemployment Claims came in at 263 thousand, close to the forecast of 265 thousand. It marked the third straight week that the indicator has beat estimates. Earlier in the week, the ADP Nonfarm Employment Change was little changed in August, posting a gain of 177 thousand. This beat the forecast of 174 thousand, the third straight month the indicator has exceeded the forecast. This release precedes the all-important official Nonfarm Employment Change report on Friday. On the housing front, Pending Home Sales gained 1.3%, well above the forecast of 0.7%, marking a 3-month high. On Tuesday, CB Consumer confidence jumped to 1o1.1 points in August, above the forecast of 99.7 points. It marked the indicator’s highest level since September 2015 and points to strong confidence on the part of the US consumer. The only soft spot so far this week was from the manufacturing front, as the ISM Manufacturing PMI pointed to contraction, with an estimate of 49.4 points. This marked the first contraction from the PMI in six months.

An upbeat speech from Fed chair Janet Yellen at Jackson Hole has revived speculation about a rate increase in September. Yellen’s message to the markets was refreshingly clear, as she said that the case for a rate increase had “strengthened in recent months”. Yellen noted that the key economic indicators were performing well – the labor market was approaching maximum employment, inflation was steady, and consumer spending remained solid. Still, Yellen did not provide any timeline on a rate hike nor did she spell out what the Fed wants to see before pressing the rate trigger. The Fed’s signal to the markets has raised the odds of a rate move, according to the CME Group FedWatch tool, with a September hike priced at 30% in September and 57% for a December hike. However, given that any move by the Fed will be data-dependent, US numbers ahead of the Fed policy meeting on September 21 could significantly change the rate outlook.

WTI/USD Fundamentals

XAU/USD Fundamentals

• 7:30 US Challenger Job Cuts. Actual -21.8%
• 8:30 US Unemployment Claims. Estimate 265K. Actual 263K
• 8:30 US Revised Nonfarm Productivity. Estimate -0.6%. Actual -0.6%
• 8:30 US Revised Unit Labor Costs. Estimate 2.0%. Actual 4.3%
• 9:45 US Final Manufacturing PMI. Estimate 52.1. Actual 52.0
• 10:00 US ISM Manufacturing PMI. Estimate 52.0. Actual 49.4
• 10:00 US Construction Spending. Estimate 0.6%. Actual 0.0%
• 10:00 US ISM Manufacturing Prices. Estimate 54.5. Actual 53.0
• 10:30 US Natural Gas Storage. Estimate 38B. Actual 51B 
• All Day – US Total Vehicle Sales. Estimate 17.2M 

Friday (September 2)

• 8:30 US Average Hourly Earnings. Estimate 0.2%
• 8:30 US Nonfarm Employment Change. Estimate 186K
• 8:30 US Unemployment Rate. Estimate 4.8%

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Thursday, September 1, 2016

XAU/USD September 1 at 13:30 EDT

Open: 1309.66 High: 1315.19 Low: 1302.50 Close: 1313.32

XAU/USD Technical

• XAU/USD posted small losses in the Asian and European sessions. The pair has reversed directions and moved upwards in North American trade
• There is strong resistance at 1331
• 1307 was tested in support earlier and is a weak line
• Current range: 1307 to 1331

Further levels in both directions:

• Below: 1307, 1279 and 1245
• Above: 1331, 1361, 1388 and 1416

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged on Thursday, consistent with the lack of significant movement from the pair. Long positions command a strong majority (68%), indicative of trader bias towards XAU/USD continuing to move upwards. 

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.