Gold Prices Flat After Weak US Numbers

Gold has had an uneventful week and continues to be listless on Friday. In the European session, the spot price stands at $1291.17 per ounce. On Thursday, gold pushed above the $1300 level but was unable to consolidate these gains. In the US, the week wraps up with New Home Sales. The markets are anticipating a strong improvement for the April release.

US housing and employment releases disappointed on Thursday. Unemployment Claims has looked sharp over the past two releases, but the short streak came to an end, as the key employment indicator climbed to 326 thousand, up from 297 thousand a week earlier. This missed the estimate of 312 thousand. With future QE tapers by the Federal Reserve contingent on solid economic data, key employment releases such as Unemployment Claims will continue to be closely scrutinized by the markets. Thursday’s other major release, Existing Housing Sales, improved in April, rising to 4.65 million. However, this was short of the estimate, which stood at 4.71M. We’ll get a look at New Home Sales on Friday, with the markets looking for the indicator to rise sharply in April.

The Federal Reserve minutes were released on Wednesday, and there was no dramatic response from the markets. In the minutes, policymakers discussed an exit strategy from its QE stimulus program, which is set to terminate at the end of 2014. This will likely mean an increase in interest rates, but the minutes didn’t provide a timetable as to when rates might go up, and by how much. Low inflation levels means there is less pressure on the Fed to raise rates next year, but the economic conditions could change in the meantime. The Federal Reserve remains comfortable with its accommodative stance, and will want to see stronger growth and employment numbers before making changes to monetary policy, such as raising rates.

XAU/USD for Friday, May 23, 2014

XAU/USD May 23 at 10:30 GMT

XAU/USD 1291.80 H: 1295.53 L: 1291.17

XAU/USD Technical

• Gold remains steady on Friday, trading slightly above the 1290 line.
• On the upside, 1300 has some breathing room as gold trades at lower levels. The next line of resistance is at 1315.
• Current range: 1280 to 1300.

Further levels in both directions:

• Below: 1280, 1275, 1260 and 1252
• Above: 1300, 1315, 1330, 1350 and 1388

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in short positions in Friday trade, reversing the trend we saw a day earlier. This is consistent with the pair’s movement, as gold has edged lower. The ratio has a substantial majority of long positions, reflecting a strong trader bias towards gold gaining ground against the US dollar.

Gold is showing little movement on Friday. XAU/USD has edged lower in the European session.

XAU/USD Fundamentals

14:00 US New Home Sales. Estimate 426K.

*Key releases are highlighted in bold

*All release times are GMT

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