XAU/USD – Gold Edges Higher as US Productivity Declines

Gold has posted small gains on Tuesday, after a listless Monday session. In the North American session, the pair is trading at $1341.19. On the release front, it continues to be a quiet week. US numbers were a mixed bag. Preliminary Nonfarm Productivity disappointed with a decline of 0.5%, while Preliminary Unit Labor Costs gained 2.0%, above the estimate.

Is the US economy on the rebound? US employment numbers sparkled on Friday, led by Nonfarm Employment Change. The July report surprised the markets with a huge gain of 255 thousand, crushing the estimate of 180 thousand. This release follows the outstanding June reading of 280 thousand. US wage growth has been a soft spot in the robust labor market, but there was positive news as Average Hourly Earnings gained 0.3%, edging above the forecast of 0.2%. As well, Unemployment Claims remained steady at 4.9%. What will the Federal Reserve do with these numbers? Prior to the payrolls release, a September hike was virtually off the table, especially in light of the soft US GDP report in late July. The Fed has made no secret of the fact that any rate move will be data-dependent, and the stellar job numbers will force to Fed to give serious thought to a move in September. US employment and inflation releases in the next few weeks will be critical factors in determining if the Fed makes a move next month, or revisits rates in December. As gold prices are closely linked to interest rate moves, continuing speculation about a rate move could result in volatility in gold prices.

XAU/USD Fundamentals

Tuesday (August 9)

• 10:00 US NFIB Small Business Index. Estimate 94.5. Actual 94.6
• 8:30 US Preliminary Nonfarm Productivity. Estimate 0.5%
• 8:30 US Preliminary Unit Labor Costs. Estimate 1.8%
• 10:00 US IBD/TIPP Economic Optimism. Estimate 46.2. Actual 48.4
• 10:00 US Wholesale Inventories. Estimate 0.0%. Actual 0.3%

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Tuesday, August 9, 2016

XAU/USD August 9 at 10:30 EDT

Open: 1335.98 High: 1342.66 Low: 1330.55 Close: 1341.19

XAU/USD Technical

• XAU/USD was flat in the Asian and European sessions. The pair has posted gains in North American trade
• There is resistance at 1361
• 1331 was tested in support earlier in the Tuesday session
• Current range: 1331 to 1361

Further levels in both directions:

• Below: 1331, 1307 and 1279
• Above: 1361, 1388, 1416 and 1447

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Tuesday session, consistent with the lack of significant movement from XAU/USD. Long positions have a majority (63%), indicative of trader bias towards XAU/USD continuing to move upwards. 

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.