Slumping Gold Heads Toward $1100 Line

Gold is steady on Thursday, trading at a spot price of $1109.47 per ounce in the European session. In the US, today’s highlight is Unemployment Claims. On Friday, we’ll get a look at one of the most important market-movers, US Nonfarm Payrolls. 

Gold prices have been falling over the past four weeks, with the symbolic level of $1100 within striking distance. Gold was hammered by the ECB and the Federal Reserve in late October, sustaining sharp losses as a result of statements from the two central banks. In the case of the ECB, it was a broad hint of further easing that sent gold lower. Last week, gold prices slipped as the Federal Reserve surprised the markets, stating that a rate hike in December was very much on the table. Investors snapped up US dollars after the ECB and Fed announcements, dumping gold holdings in the process.

The US continues to release key job numbers on Thursday and Friday, and these indicators could have a sharp impact on the movement on gold prices. On Wednesday, ADP Nonfarm Payrolls slipped to 182 thousand, close to the estimate of 183 thousand. Still, the indicator slipped badly in comparison to the previous release of 200 thousand. Unemployment Claims are expected to stay rise slightly, and the real test is on Friday, with the release of the unemployment rate and Nonfarm payrolls. NFP is expected to rise sharply to 173 thousand, so the dollar could be a big winner as we wrap up the trading week. Aside from employment numbers acting as an important gauge of the US economy, this week’s releases have added significance, since strong numbers will increase the likelihood of a rate cut in December. Conversely, a poor performance will damper expectations of a move by the Fed before 2016, which could boost gold’s sagging fortunes.

XAU/USD Fundamentals

Thursday (Nov. 5)

• 12:30 US Challenger Job Cuts
• 13:30 US Unemployment Claims. Estimate 263K
• 13:30 FOMC Member William Dudley Speaks
• 13:30 US Preliminary Nonfarm Productivity. Estimate 0.1%
• 13:30 US Preliminary Unit Labor Costs. Estimate 2.2%
• 14:10 FOMC Member Stanley Fischer Speaks
• 15:30 US Natural Gas Storage. Estimate 60B
• 18:30 FOMC Member Dennis Lockhart Speaks

Upcoming Key Releases

Friday (Nov. 6)

• 13:30 US Average Hourly Earnings. Estimate 0.2%
• 13:30 US Nonfarm Employment Charge. Estimate 179K
• 13:30 US Unemployment Rate. Estimate 5.0%

*Key releases are highlighted in bold

*All release times are GMT

XAU/USD for Thursday, November 5, 2015

XAU/USD November 5 at 12:20 GMT

XAU/USD 1109 H: 1111 L: 1106

XAU/USD Technical

• XAU/USD has been flat in the Asian and European sessions.
• 1134 continues to provide resistance.
• 1098 is a weak support level.
• Current range: 1098 to 1134

Further levels in both directions:

• Below: 1098, 1080 and 1043
• Above: 1134, 1151, 1162 and 1180

OANDA’s Open Positions Ratio

XAU/USD ratio is showing movement towards long positions, which command a strong majority (70%). This is indicative of trader bias towards gold 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.