XAU/USD – Gold Slips to 10-month Lows, Nonfarm Payrolls Ahead

Gold has lost ground in the Thursday session, continuing the downward trend we’ve seen for most of the week. In North American trade, the spot price for one ounce of gold is $1165.75. On the release front, unemployment claims disappointed. The indicator climbed to 268 thousand, its highest level since July. The markets had expected a reading of 252 thousand. On a positive note, ISM Manufacturing PMI improved to 53.2, beating the estimate of 52.1. US Employment indicators will be in the spotlight on Friday, highlighted by US Nonfarm Payrolls, one of the most important indicators.

November was a dismal month for gold, as the metal dropped 8.0 percent, its sharpest monthly decline since June 2013. The slide has continued on Thursday, as gold prices have fallen to their lowest level since early February. A strong US economy has increased the appetite for risk, reducing demand for the safe-haven metal. As well, the expected rate hike in December is weighing on gold prices.

The US economy continues to impress and posted an excellent GDP report for the third quarter. Preliminary GDP sparkled in the third quarter, as the economy expanded 3.2%, above the forecast of 3.0%. The 3.2% gain was an upwards revision of Advance GDP, which came in at 2.9%. There was also good news on the consumer front. Solid consumer confidence numbers have been a critical factor in the US recovery, as stronger consumer confidence is linked to increased consumer spending. CB Consumer Confidence jumped to 107.1 points in November, surpassing the 100-level for the third time in four months. Last week, UoM Consumer Sentiment jumped to 93.8 points, its highest level since May. Donald Trump’s surprise election victory has not had an adverse effect on consumer confidence, and if these rosy numbers translate into stronger consumer spending, the US dollar could continue to climb against its rivals.

US Q3 GDP Revised Upward on Consumer Spending

XAU/USD Fundamentals

Thursday (December 1)

• 7:30 US Challenger Job Cuts. Actual -13%
• 8:30 US Unemployment Claims. Estimate 252K. Actual 268K
• 9:45 US Final Manufacturing PMI. Estimate 53.9. Actual 54.1
• 10:00 US ISM Manufacturing PMI. Estimate 52.1. Actual 53.2
• 10:00 US Construction Spending. Estimate 0.6%. Actual 0.5%
• 10:00 US ISM Manufacturing Prices. Estimate 52.0. Actual 54.5
• 10:30 US Natural Gas Storage. Estimate -52B. Actual -50B
• All Day – US Total Vehicle Sales

Upcoming Key Events

Friday (December 2)

• 8:30 US Average Hourly Earnings. Estimate 0.2%
• 8:30 US Nonfarm Employment Change. Estimate 165K
• 8:30 US Unemployment Rate. Estimate 4.9%

*All release times are EST

*Key events are in bold

XAU/USD for Thursday, December 1, 2016

XAU/USD December 1 at 12:30 EST

Open: 1172.38 High: 1176.75 Low: 1160.65 Close: 1165.75

XAU/USD Technical

• XAU/USD posted small gains in the Asian session but gave up these gains in European trade . The pair has been choppy in North American trade
• 1146 is providing support
• 1174 was breached earlier in resistance
• Current range: 1146 to 1174

Further levels in both directions:

• Below: 1146, 1130 and 1111
• Above: 1174, 1205, 1223 and 1245

OANDA’s Open Positions Ratio

XAU/USD ratio is almost unchanged in the Thursday session. Currently, long positions have a substantial majority (79%). This is indicative of trader bias towards XAU/USD 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.