Gold trading outlook: futures orbit Monday’s close

Gold contracts kept steady during early trading in Europe, after on Monday news of intense battles in Ukraine prompted increased safe-haven demand. Recent data, signifying the improving state of the US economy was not enough to overcome the risk-off mentality of investors, though long-term pressure remains.

Gold futures due in June traded for $1 311.1 per troy ounce at 8:21 GMT on the COMEX in New York today, adding 0.14% from last session’s closing price. Daily high and low stood at $1 314.4 and $1 308.0 per troy ounce, respectively. On Monday the precious metal reached a three-week peak at $1 315.8, on news of bitter fighting in Ukraine. Previously, on Friday the contract reversed a four-day losing streak, to climb to positive range, closing for a 0.2% gain for the week.

Ukraine

The so-called “anti-terrorist” operation, taking place around the pro-Russian stronghold of Sloviansk, saw bloody battles yesterday. Kiev reported at least four government soldiers were killed and about 30 injured, and a helicopter downed. The battle has yet to reach a conclusion, though the city has been quiet today, the BBC reported.

Previously, after a Ukrainian advance was halted and the government troops lost two helicopters and a number of soldiers, the militants wrestled back control of some of the citys suburbs. The stronghold remains blockaded by the military.

Elsewhere in the country, the southwestern city of Odessa has witnessed severe unrest in the past few days. Opposing crowds battled on Friday in an event, which resulted in the deaths of dozens of pro-Russian sympathizers in a building fire. Monday saw a mob of several hundred assault the city’s police headquarters and freeing those detained for Friday’s violence.

Acting Ukrainian Prime Minister Arseniy Yatsenyuk accused Russia of inciting the unrest: “Russia’s aim was to repeat in Odessa what is happening in the east of the country.” He went on to add, that Kiev had not lost control of the region, and that Russia is executing a plan “to destroy Ukraine and its statehood,” the BBC reported.

Meanwhile, US President Barack Obama and German Chancellor Angela Merkel agreed the date of May 25th as a trigger for more sanctions against Russia, should the Kremlin fail to revise its position.

US economy

Yesterday ISMs non-manufacturing April PMI for the US, revealed a standing of 55.2, beating forecasts and reaching the highest figure in 6 months. The standing indicates that services, which represent the bulk of US GDP, have gained momentum and are growing more quickly.

Previously, employment figures from Friday recorded readings for April at multi-year highs, with unemployment rate at 6.3%, the lowest since October 2008, and new non-farm payrolls at 288 000. The reports added to previous data on improving consumer spending and factory activity, buffing confidence in the US economy and pressuring gold.

Holdings at the SPDR Gold Trust reached the lowest point since January 2009 at 782.85 tons on May 2nd. The fund has lost 10 tons last week. The discouraging outflow suggests investor interest in the precious metal is at a multi-year low, as the US economy recovers.

Technical view

According to Binary Tribune’s daily analysis, in case Gold June futures manage to breach the first resistance level at $1 316.8 on Monday, the contract will probably continue up to test $1 324.4. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 332.9.

If the contract manages to breach the first key support at $1 300.7, it will probably continue to slide and test $1 292.2. With this second key support broken, the movement to the downside may extend to $1 284.6.