Gold Rises on Weak US Jobless Claims Report

Gold has posted slight gains on Thursday, recovering most of the losses which marked the Wednesday session. In North American trade, gold is trading at a spot price of $1234.65 an ounce. In economic news, Unemployment Claims rose to 276 thousand, higher than the forecast of 266 thousand. Chicago PMI improved to 53.6 points, easily beating the estimate of 50.5 points.

With the Fed sending the markets mixed messages about the timing of a rate hike, this week’s employment numbers, highlighted by Nonfarm Payrolls, are under the market microscope. On Thursday, Unemployment Claims rose last week by 276 thousand, considerably higher than the estimate of 266 thousand. Gold took advantage of the weak release and has pushed above the $1230 line. Earlier in the week, ADP Nonfarm Employment Change, which measures payrolls in the private sector, posted a solid gain of 200 thousand, above the estimate of 195 thousand. The week wraps up with the official Nonfarm Payrolls report on Friday. The forecast stands at 206 thousand. If the indicator stays within expectations, we could see gold prices head lower.

Will the real Federal Reserve please stand up? On Tuesday, Janet Yellen surprised the markets with an ultra-dovish speech in New York. Yellen served notice that the Fed would continue its cautious approach towards monetary tightening, given the collapse of oil prices and risks due to the Chinese slowdown. In the days leading to the speech, several Fed officials had called for a raise in rates as early as April, but the Fed chair poured cold water on any rate hike enthusiasm with her remarks. Yellen gave notice that the Fed would maintain its cautious approach towards monetary tightening, given the risks to the US economy from turbulent global conditions and weakness in China. Yellen downplayed higher inflation levels, which in January reached 1.7 percent, the highest in almost two years. This reading is not far from the Fed’s target of 2.0 percent and some Fed members have gone on record saying that the Fed should raise rates before inflation pushes above the 2.0 percent threshold. Will Yellen’s cautious assessment be reinforced or challenged by her Fed colleagues? New York Fed president William Dudley will address a meeting in Lexington, Virginia on Thursday, and the markets will be looking for Dudley’s take on Yellen’s comments.

XAU/USD Fundamentals

• 7:30 US Challenger Job Cuts. Actual 31.7%
• 8:30 US Unemployment Claims. Estimate 266K. Actual 276K
• 9:45 US Chicago PMI. Estimate 50.5. Actual 53.6
• 10:30 US Natural Gas Storage. Estimate -20B. Actual -25B
• 17:00 US FOMC Member William Dudley Speaks

Upcoming Key Events

Friday (April 1)

• 8:30 US Average Hourly Earnings. Estimate 0.2%.
• 8:30 US Nonfarm Employment Change. Estimate 206K
• 8:30 US Unemployment Rate. Estimate 4.9% 

*Key releases are highlighted in bold

*All release times are DST

XAU/USD for Thursday, March 31, 2016

XAU/USD March 31 at 13:00 DST

Open: 1226.75 Low: 1223.50 High: 1240.41 Close: 1234.65

XAU/USD Technical

• XAU/USD showed marginal movement in the Asian session. The pair posted gains in European trade and is steady in the North American session.
• There is resistance at 1255
• 1232 remains fluid and has switched to a support role. It is a weak line and could see further action in the North American session
• Current range: 1232 to 1255

Further levels in both directions:

• Below: 1232, 1205, 1191 and 1169
• Above: 1255, 1279 and 1303

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged on Thursday. Long positions retain a strong majority (56%), indicative of trader bias towards gold continuing its upward movement.

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.