Gold Slides as US Jobless Claims Sparkle

Gold has recorded considerable losses in the Thursday session. In North American trade, the spot price for one ounce is $1235.45. On the release front, US unemployment claims sparkled, falling to 223 thousand, the fewest claims since March 1973. On Friday, the US releases ISM Non-Manufacturing PMI, and the markets will be listening closely as Janet Yellen and three other FOMC members deliver speeches.

As sentiment grows for a March rate hike, gold prices continue to head downwards. The metal has slipped 1.8 percent this week, erasing last week’s gains. The US dollar has pushed higher, thanks to hawkish statements from Federal Reserve policymakers. On Tuesday, FOMC members William Dudley and John Williams both hinted at an imminent hike by the Fed, which has raised the odds of a March hike at 66%, according to Reuters. Dudley said the case for a hike is compelling, while Williams noted that a rate increase will be up for “serious consideration” at the March policy meeting. The markets will be listening closely to speeches from other FOMC members this week, culminating in speeches from Janet Yellen and Fed Governor Stanley Fischer on Friday. If the Fed policymakers continue to hint at March move, gold could continue to move lower.

There was a great deal of anticipation ahead of President Trump’s maiden speech to Congress on Tuesday. In the end, however, the speech was short on specifics and market reaction was muted. Trump promised “massive” tax relief for the middle class as well as corporate tax cuts. However, he failed to provide details or even timelines on tax reform or infrastructure spending, two themes which he has discussed since the election campaign. Trump stated that he will ask Congress to approve legislation for $1 trillion in infrastructure spending, “financed through both public and private capital”. Analysts noted that although Trump touched on the protectionist theme, such as the trade imbalance with China, his tone was less belligerent than we’ve seen in the past.

XAU/USD Fundamentals

Thursday (March 2)

• 8:30 US Unemployment Claims. Estimate 243K. Actual 223K
• 10:30 US Natural Gas Storage. Estimate -5B

Upcoming Key Events

Friday (March 3)

• 10:00 US ISM Non-Manufacturing PMI. Estimate 56.5
• 13:00 Federal Reserve Chair Janet Yellen Speech

*All release times are GMT

*Key events are in bold

XAU/USD for Thursday, March 2, 2017

XAU/USD March 2 at 13:00 EST

Open: 1247.12 High: 1248.80 Low: 1234.67 Close: 1235.45

XAU/USD Technical

• XAU/USD was flat in the Asian session. The pair has posted losses in the European and North American sessions
• 1232 is under pressure in support. It could break in the North American session
• 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 continues to show gains in long positions. Currently, long positions have a majority (65%), indicative of trader bias towards XAU/USD reversing directions and moving upwards.

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