Gold Kicks Off Week With a Whimper

Gold is flat on Monday, as the spot price stands at $1304.37 in the European session. On the release front, it’s a quiet day, highlighted by Pending Home Sales.

In the US, a mostly positive week ended on a high note, as durable goods data exceeded expectations. Core Durable Goods Orders jumped 0.8%, beating the estimate of 0.6%, and rebounding nicely from a decline of 0.1% in May. Durable Goods Orders followed suit, posting a gain of 0.7%, compared to a weak reading of -1.0% last month. This easily surpassed the estimate of 0.4%. Earlier last week, Unemployment Claims tumbled, as the key indicator fell to 284 thousand, its lowest level since February 2008. This surprised the markets, which had expected a reading of 310 thousand. The strong release continues a string of solid employment data, which has helped the dollar. As well, positive news on the employment front is bound to increase speculation about a rate increase by the Federal Reserve.

Gold prices are sensitive to geopolitical events, and there are two hotspots that could affect prices in a hurry if the current situation deteriorates. In the Ukraine, tensions remain high after the downing of a Malaysian jetliner, and sporadic fighting continues between pro-Russian separatists and Ukrainian forces. On the weekend, the US accused Russia of firing on Ukrainian positions from its territory. The second trouble spot is in Gaza, as fighting rages between Hamas and Israel. The fighting has continued for over three weeks, and the US is intensifying efforts to halt the violence, which has proven to be a monumental task, as numerous ceasefires have been declared and broken.

XAU/USD for Monday, July 28, 2014

XAU/USD July 25 at 10:40 GMT

XAU/USD 1304.37 H: 1309.27 L: 1301.28

XAU/USD Technical

S3

S2

S1

R1

R2

R3

1252

1275

1300

1315

1331

1354

XAU/USD was unchanged in the Asian session and the lack of movement has continued in European trading.

The round number of 1300 is weak resistance. 1315 is stronger.

1275 is providing support. 1252 follows.

Current range: 1275 to 130.

Further levels in both directions:

Below: 1300, 1275, 1252 and 1240

Above: 1315, 1331, 1345 and 1366

OANDA’s Open Positions Ratio

XAU/USD ratio is pointing to gains in short positions on Monday. This is consistent with the pair’s movement, as the pair has posted small gains. The ratio has a majority of long positions, indicative of trader bias towards gold prices moving upwards.

XAU/USD Fundamentals

13:45 US Flash Services PMI. Estimate 62.3 points.

14:00 US Pending Home Sales. Estimate -0.2%.

*Key releases are highlighted in bold

*All release times are GMT

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.

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