XAU/USD – Gold Unchanged as Markets Look for Economic Cues

Gold is showing little movement in the Tuesday session. In North American trade, the spot price for an ounce of gold is $1168.33. On the release front, there are no major US releases on the schedule. The US trade deficit widened to $42.6 billion, above the forecast of $41.5 billion. IBD/TIPP Economic Optimism, a consumer confidence indicator, improved to 54.8, beating the estimate of 52.3.

Gold prices remain under pressure, trading at levels last since in February. November was a dismal month for gold, which dropped 8.0 percent, its sharpest monthly decline since June 2013. A strong US economy has not been good news for the safe-haven metal, as investors have regained an appetite for riskier assets. As well, it is virtually certain that the Federal Reserve will raise interest rates next week, which would mark the first hike by the Fed in a year. Expectations of a rate hike have sent the US dollar broadly higher at the expense of gold, as gold prices are inversely linked to interest rate levels. Barring a major US release which falls short of target, we could see gold prices continue to dip during the week.

US employment numbers took center stage on Friday and the readings were a mixed bag. Nonfarm Payrolls improved to 178 thousand, edging above the forecast of 177 thousand. This marked a 4-month high. However, Average Hourly Earnings, which measures wage growth, surprised with a decline of 0.1%, short of the estimate of 0.2%. This was the first decline in wage growth since March. The unemployment rate dropped to just 4.6%, well below the forecast of 4.9%. The decrease in labor market slack is likely to put more pressure on inflation levels, which remain weak despite a strong economy. Preliminary GDP expanded at a clip of 3.2% in the third quarter, beating the estimate of 3.0%.

XAU/USD Fundamentals

Tuesday (December 6)

• 8:30 US Revised Nonfarm Productivity. Estimate 3.2%. Estimate 3.1%
• 8:30 US Trade Balance. Estimate -41.5B. Actual -42.6B
• 8:30 US Revised Unit Labor Costs. Estimate 0.4%. Actual 0.7%
• 10:00 US Factory Orders. Estimate 2.5%. Actual 2.7%
• 10:00 US IBD/TIPP Economic Optimism. Estimate 52.3. Actual 54.8

*All release times are EST

*Key events are in bold

XAU/USD for Tuesday, December 6, 2016

XAU/USD December 6 at 13:00 EST

Open: 1170.13 High: 1175.41 Low: 1166.53 Close: 1168.33

XAU/USD Technical

• XAU/USD has shown limited movement throughout the Tuesday session
• 1146 is providing support
• 1174 was tested earlier in resistance and could break in the North American session
• 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 showing little movement in the Tuesday session. Currently, long positions command a substantial majority (77%). This is indicative of trader bias towards XAU/USD breaking out and moving to higher levels.

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