XAU/USD: Long positions are preferable. Fundamental analysis for 08/08/2016

Number of jobs outside agriculture sector of the US has grown by 255 000 in July against the forecast of +180 000. The index for June was revised from up to 287000 to 292000; and from 11000 to 24000 in May. Unemployment rate remained unchanged (4.9% versus the forecast of 4.8% and 4.9% in June). This data was presented last Friday by the US Labor Department, caused the rise in the USD in the market.

The dollar index WSJ, which evaluates the rate of the American currency against 16 major currencies, has grown by 0.3%. US employment data has decreased the demand for safe-haven assets, including gold.

Positive labor market data will increase probability of the key interest rate increase in September.

December futures for gold at COMEX closed down by 1.7%, to 1345.00 USD per troy ounce, what is the strongest intraday decline since May 24. Spot price of gold fell by 24USD per ounce last Friday. This Monday the price continues to decline.

High interest rates put downward pressure on gold, as gold does not bring interest income; therefore it loses popular with increasing borrowing costs for its purchase and storage.

However, market estimates probability of the monetary policy tightening by the US Fed in September at 15% (9% before the publication of the NFP). In case of weak data on the US GDP NFP report will insufficient to make the Fed adopt decision to raise interest rate in September.

It is unlikely that the US Fed will raise interest rate before the first debate between presidential candidates Hillary Clinton and Donald Trump, which is scheduled for September 26. US interest rate can be increased by 0.25% in December.

Gold prices are supported by concerns about the state of the global economy and the decrease in the interest rates by several Central Banks with the prospect of further monetary policy easing by these Banks. Up to date the price of gold has grown by 28%, which makes long positions remain preferable.

XAU/USD: Long positions are preferable.  Fundamental analysis for 08/08/2016