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Friday, November 07, 2014

Gold Stable As Markets Eye US Job Numbers

Gold continues to show little movement on Friday. In the European session, the spot price stands at $1145.55. Gold prices have tumbled almost 7% in little over a week, as XAU/USD trades at 4.5-year lows.
Employment events are in the spotlight, with the release of Nonfarm Employment Change and the Unemployment Rate. The markets are expecting solid figures from both key releases. Later in the day, Fed Chair Janet Yellen will speak at an event in Paris, France.
Mario Draghi and his ECB colleagues haven’t had much to cheer about lately, with the Eurozone mired in low growth, weak inflation and high unemployment. Draghi has lowered interest rates to the bone, but the cuts have not improved the economic situation. The ECB has decided to focus on its balance sheet and has issued long-term loans to banks and purchased covered bonds. The ECB will begin buying asset-backed purchases later this month, so we could see the wobbly euro lose more ground. However, these moves may not be enough and Draghi may be forced to borrow a page from the book of other central banks and commence QE, which is the purchase of government securities.
With the US recovery continuing to deepen, employment numbers continue to improve. This trend was underscored on Thursday, as Unemployment Claims fell to 278 thousand. This was better than the estimate of 285 thousand and marked a three-week low. This strong figure comes on the heels of the ADP Nonfarm Payrolls report, which climbed to 230 thousand, its strongest showing in 2014. The week wraps up with the official Nonfarm Payrolls release on Friday. The markets are expecting a downturn, with the estimate standing at 229 thousand. Will the key indicator surprise the markets and beat the forecast? If so, gold prices could soften.

XAU/USD for Friday, November 7, 2014

XAU/USD November 7 at 9:55 GMT
XAU/USD 1145.55 H: 1146.66 L: 1130.02

XAU/USD Technical
S3 S2 S1 R1 R2 R3
1073 1111 1130 1156 1175 1200

  • Gold lost ground in the Asian session, dropping to support at 1130 but unable to break through. The pair then rebounded and recovered these losses. In European trade, the pair is steady.
  • 1156 is an immediate resistance line. 1175 is stronger.
  • 1130 is a weak support line. 1111 is next.
  • Current range: 1130 to 1156.
Further levels in both directions:
  • Below: 1130, 1111, 1073 and 1041
  • Above: 1156, 1175, 1200, 1215 and 1240

OANDA’s Open Positions Ratio
XAU/USD ratio is pointing to gains in short positions on Friday. This is not consistent with the pair’s movement, as gold has posted small gains. The ratio has a majority of long positions, indicative of trader bias in favor of gold moving higher.

XAU/USD Fundamentals
  • 00:05 US FOMC Member Loretta Mester Speaks.
  • 13:30 US Nonfarm Employment Change. Estimate 235K.
  • 13:30 US Unemployment Rate. Estimate 5.9%.
  • 13:30 US Average Hourly Earnings. Estimate 0.2%.
  • 15:15 US Fed Chair Janet Yellen Speaks.
  • 19:00 US Consumer Credit. Estimate 16.6B.
  • 19:30 US FOMC Member Daniel Tarullo Speaks.
*Key releases are highlighted in bold
*All release times are GMT

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