Gold Softens, Close to 14-Month Lows

Gold prices are steady on Tuesday, after posting losses a day earlier. In Tuesday’s European session, the spot price stands at $1258.22 per ounce. Gold is close to its lowest level since June 2013, as the dollar’s broad gains have pushed gold prices lower. In the US, today’s highlight is JOLTS Jobs Openings. The employment indicator has improved over three consecutive releases, and the upward swing is expected to continue, with an estimate of 4.72M.

US employment data continues to be a concern, as the eagerly-anticipated Nonfarm Employment Change crashed to just 142 thousand on Friday, its lowest gain since January. The markets had expected a gain of 226 thousand. This follows a weak ADP Nonfarm Payrolls report as well as a rise in unemployment claims. There was better news from the services sector, as the ISM Non-Manufacturing PMI continued its impressive climb, hitting 59.6 points in August, well above the estimate of 57.3. This reading follows the ISM Manufacturing PMI, which climbed to 59.0 points. The impressive readings from the manufacturing and services sectors point to a balanced economic recovery. If US numbers continue to improve, we could see an interest rate hike in the early part of 2015.

Dramatic and unexpected monetary action by the ECB on Thursday sent the euro reeling below the 1.30 level. The markets had not expected any change to interest rates, but the ECB took the axe for the second time in three months, cutting the benchmark rate to a record low of 0.05%, down from 0.15%. As well, the deposit facility rate was lowered to -0.20% from -0.10% and the marginal lending rate dropped to 0.30% from 0.40%. ECB head Mario Draghi had more in store, saying that the central bank plans to implement an asset purchase program (QE). Draghi didn’t elaborate, saying the ECB would provide more details in October. The interest rate cuts and QE scheme are intended to bolster anemic growth in the Eurozone and combat the growing threat of deflation.

XAU/USD for Tuesday, September 9, 2014

XAU/USD September 9 at 9:10 GMT

XAU/USD 1258.22 H: 1256.46 L: 1253.19

XAU/USD Technical

• XAU/USD has been flat in the Asian and European sessions.
• 1252 remains an immediate support line. This is followed by support at 1240.
• 1275 is the next resistance line. The round number of 1300 is next.
• Current range: 1252 to 1275.

Further levels in both directions:

• Below: 1252, 1240, 1210 and 1186
• Above: 1275, 1300, 1315 and 1331

OANDA’s Open Positions Ratio

XAU/USD ratio is almost unchanged on Tuesday, continuing the trend seen a day earlier. This is consistent with the lack of movement we’re seeing from the pair. The ratio continues to have a substantial majority of long positions, indicative of trader bias towards gold breaking out of the current range and moving to higher levels against the dollar.

XAU/USD Fundamentals

• 11:30 US NFIB Small Business Index. Estimate 95.9 points. Actual 96.1 points.
• 14:00 US JOLTS Job Openings. Estimate 4.72M.
• 14:00 US FOMC Member Daniel Tarullo Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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.