Strong Gains for Gold as US Jobless Claims Jumps

Gold has posted considerable gains on Thursday. The base metal is trading at a spot price of $1258.70 per ounce in the North American session. On the release front, US Unemployment Claims climbed for a second straight week, with a reading of 278 thousand. The ISM Non-Manufacturing PMI was almost unchanged, with a respectable reading of 53.4 points. This beat the forecast of 53.2 points. There are a host of key events on Friday, highlighted by Nonfarm Payrolls.

A robust labor market in late 2015 was a key reason that the Federal Reserve opted to raise rates in December. However, this year’s employment numbers have been mixed, and this has also been the trend so far this week. Unemployment Claims rose for a second straight week, rising to 278 thousand. Earlier in the week, ADP Nonfarm Payrolls improved to 214 thousand, crushing the estimate of 185 thousand. Will we see a repeat in the official Nonfarm Payrolls on Friday? A strong NFP release could revive speculation about a March rate hike by the Federal Reserve, although this scenario remains very unlikely. Meanwhile, there has been some improvement in the manufacturing sector, which has persistently posted poor numbers. Last week, durable goods reports sparkled, easily beating expectations. This was followed by ISM Manufacturing PMI, which improved to 49.5 points in January. Although this reading indicates slight contraction, it beat expectations and marked a four-month high. These readings have revived hopes that the worst is behind the manufacturing sector and that 2016 will bring better news to the beleaguered industry.

XAU/USD Fundamentals

• 8:15 US ADP Non-Farm Employment Change. Estimate 185K. Actual 214K
• 10:30 US Crude Oil Inventories. Estimate 2.5M. Actual 10.4M
• 14:00 US Beige Book

Upcoming Key Events

Thursday (March 3)

• 8:30 US Unemployment Claims. Estimate 271K
• 10:00 US ISM Non-Manufacturing PMI. Estimate 49.8 points

*Key releases are highlighted in bold

*All release times are EST

XAU/USD for Thursday, March 3, 2016

XAU/USD March 3 at 12:50 EST

Open: 1241.69 Low: 1238.19 High: 1260.90 Close: 1258.70

XAU/USD Technical

• 1232 remains busy and has switched to support following gains by gold on Wednesday
• There is resistance at 1279
• Current range: 1255 to 1279

Further levels in both directions:

• Below: 1255, 1232, 1205 and 1191
• Above: 1279, 1303 and 1327

OANDA’s Open Positions Ratio

XAU/USD ratio has shown slight movement towards short positions. Long and short positions are close to an even split, indicative of a lack of trader bias as to what direction gold will take next.

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.