Gold reeling after Fed minutes, strong inflation data

Gold has posted sharp losses on Thursday. In the North American session, the spot price for one ounce of gold is $1293.96, down 1.07% on the day. On the fundamentals front, inflation numbers were stronger than expected. PPI climbed 0.6%, above the estimate of 0.3%. Core PPI improved to 0.3%, edging above the forecast of 0.2%. Unemployment claims sparkled, dropping to 196 thousand, well below the estimate of 210 thousand. On Friday, the U.S. posts UoM consumer sentiment and the semi-annual Treasury currency report.

Gold had posted strong gains of 1.3% this week, but the rally was snuffed out on Thursday. Investors reacted with optimism to the Fed minutes, as officials left the door open for further rate hikes this year, provided that economic growth improved. In sharp contrast, the markets do not expect any rate hikes before 2020, and some analysts say the Fed could actually lower rates later this year. Strong PPI numbers for March have also raised risk appetite and made safe-haven gold less attractive to investors.

The U.S. labor market has been a bright spot in the economy, but recent employment numbers have slipped. JOLTS Job Openings dropped sharply to 7.09 million, down from 7.54 million in the previous release. The weak reading came on the heels of key employment numbers in March. Wage growth gained just 0.1%, while nonfarm employment payrolls came in at 196 thousand, lower than recent readings which broke above the 300-thousand level. With the labor market losing some its luster and the U.S. economy showing signs of slowing down, gold was able to break through the $1300 level earlier this week.

Markets continue to kick the can down the road

XAU/USD Fundamentals

Thursday (April 11)

• 8:30 US PPI. Estimate 0.3%. Actual 0.6%
  
• 8:30 US Core PPI. Estimate 0.2%. Actual 0.3%
  
• 8:30 US Unemployment Claims. Estimate 210K. Actual 196K
• 9:30 US FOMC Member Clarida Speaks
• 9:35 US FOMC Member Williams Speaks
• 9:40 US FOMC Member Bullard Speaks
• 10:30 US Natural Gas Storage. Estimate 32B. Actual 25B
  
• 13:01 US 30-year Bond Auction.
• 16:00 US FOMC Member Bowman Speaks

Friday (April 12)

• 10:00 US UoM Consumer Sentiment. Estimate 98.1
• Tentative – US Treasury Currency Report

*All release times are DST

*Key events are in bold

XAU/USD for Thursday, April 11, 2019

XAU/USD April 11 at 12:30 DST

Open: 1308.02 High: 1309.24 Low: 1292.88 Close: 1293.96

XAU/USD Technical

XAU/USD ticked higher in the Asian session. The pair dropped considerably in the European session and has posted sharper losses in North American trade

• 1284 is providing support
• 1306 has switched to a resistance role after sharp losses by XAU/USD on Thursday
• Current range: 1284 to 1306
  

Further levels in both directions:

• Below: 1284, 1261 and 1243
• Above: 1306, 1326, 1344 and 1365

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