Marginal Movement for Gold on US Thanksgiving Holiday

Gold is uneventful on Thursday, as the metal trades at a spot price of $1071.91 in the European session. US markets are closed for Thanksgiving, so trade will remain thin and we’re unlikely to see much movement during the day.

There were a host of US events on Wednesday, and the key releases played to mixed reviews. Unemployment Claims plunged to 260 thousand, well off the estimate of 273 thousand. There was more good news from Core Durable Goods, which rebounded with a strong gain of 0.5%, matching the forecast. UoM Consumer Sentiment improved to 91.3 points, but the markets were overly optimistic, as the estimate stood at 93.2 points. This consumer confidence indicator comes on the heels of CB Consumer Confidence, which dropped to 90.4 points, nowhere close to the estimate of 99.3 points. These weak consumer confidence readings could raise concerns, as soft consumer confidence numbers could translate into weaker consumer spending, which is a key driver of economic growth.

November has not been kind to gold, as the base metal has plunged around 8 percent in the past several weeks. The economic slowdown in China and other emerging countries continues to have a negative impact on global commodity prices, including gold. Despite terror alerts in Western Europe and rising tensions in the Middle East, investors have not snapped up gold, traditionally a safe haven in times of trouble. With the US posting strong numbers recently, especially employment data, rising speculation about a rate hike next month has buoyed the US dollar.

Will the Federal Reserve press the rate trigger at the December policy meeting? Last week’s Fed minutes did not confirm a December rate hike, but most analysts feel that the long-awaited move will indeed occur next month. The Fed hinted at a rate hike in its October policy statement, and the markets have been abuzz ever since. Last week, New York Fed President William Dudley said there is a “strong case” for a rate hike in December as long as economic data remains strong. With the US economy showing improvement and employment and consumer indicators pointing upwards, the markets appear prepared for a small hike of 0.25% or 0.50%, and there is a growing view that modest, incremental moves will not cause turbulence on the global markets. One fly in the ointment is that of weak inflation levels, as the Fed has repeatedly stated that inflation is a key consideration in any decision to raise rates. With the critical Fed meeting only a few weeks away, every key indicator and comment from a Fed member will be under close scrutiny from the markets.

XAU/USD Fundamentals

Thursday (Nov. 26)

• All Day – US Bank Holiday

XAU/USD for Thursday, November 26, 2015

XAU/USD November 26 at 12:50 GMT

XAU/USD 1072 H: 1074 L: 1069

XAU/USD Technical

• XAU/USD has been uneventful in the Asian and European sessions.
• 1080 is a weak resistance line.
• 1043 remains a strong support level.
• Current range: 1043 to 1080

Further levels in both directions:

• Below: 1043, 1024 and 980
• Above: 1080, 1098, 1134 and 1151

OANDA’s Open Positions Ratio

XAU/USD ratio is showing little movement, reflective of the lack of movement from the pair. Long positions continue to make up a strong majority (76%), indicative of strong trader bias towards gold prices reversing directions and moving to higher levels.

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.