Gold trading outlook: futures supported by Ukraine; US data eyed

Gold futures made slight gains during early trading in Europe today, after the self-rule referendum in Eastern Ukraine resulted in an overwhelming victory for separatists, stocking safe-have demand. Moscows reaction is still to come, and the EU has already drafted a list of 15 new individuals and companies to be sanctioned. The US economy will post major figures this week, with expectations of concrete improvement across, pressuring the precious metal.

Gold futures due in June traded for $1 289.3 per troy ounce at 7:53 GMT on the COMEX in New York today, adding 0.13%. Daily high and low stood at $1 293.0 and $1 277.7 per troy ounce, respectively. The contract recorded a 1.17% loss last week, pressured by the recovering US economy.

Separatists in Donetsk region in Eastern Ukraine have declared victory in the independence referendum, which took place on Sunday. They reported that 89% of voters backed self-rule, and said turnout was at 75%. Luhansk will post results later today, with expectations of a resounding victory there as well.

Organizers said that all government troops will be considered “occupying forces”. Furthermore, the separatists plan to hold another vote in a week’s time on whether to join the Russian Federation, much like the Crimea did earlier this year.

Ukraine and the West have condemned the vote. The EU is preparing an expansion of the list of sanctioned individuals and companies. Moscow is yet to comment on the results, after President Putin asked the rebels to postpone the referendum in light of violence and the nearing date for presidential elections in Ukraine, which he dubbed “a step in the right direction.”

Earlier, Russia celebrated 69 years since the victory over Nazi Germany on Friday. Russian President Vladimir Putin flew to the Crimea to attend the parade in Sevastopol. The move was widely condemned by the West and in Ukraine, calling it “regretful”, “inappropriate”, “provocative and unnecessary” and a “gross violation of Ukraine’s sovereignty”.

In Ukraine itself, separatists reported the deaths of two people in the town of Krasnoarmiisk, killed by government forces. Mariupol, a town in the Donetsk region, was the scene of heavy fighting on Friday, which left at 7 people dead, Ukraine’s Interior Minister Arsen Avakov reported.

US recovery

Last week a number of reports boosted positive outlooks for the US economy. Figures on employment and the services sector added to confidence for the worlds top economy. Previously, the Fed confirmed it will continue supporting the economy nonetheless.

The positive outlooks for the economy attract investments away from safe-haven and towards the higher risk-reward of equities.

A drop for the euro against the dollar also weighed on the precious metal, as the strengthening greenback lifts the price of gold.

US retail sales for April are also to be reported on Tuesday, and are forecast to have added 0.4%, down from an upward-revised 1.2% growth for March, while core retail sales are expected to show a 0.6% growth after 0.7% the previous month.

Later in the week more data will be released, with PPI, CPI and housing data expected to mark improvement.

Holdings at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, reflected the pressure by the recovering US economy, as they remained at the lowest levels since early 2009 at 782.85 tons.

China

In top gold consumer China, local premiums rose to about $3 per ounce, but still remain much lower than the over-$20 premiums earlier in the year, indicating sluggish demand amid the slowdown of growth in the the worlds second top economy.

Previously, a report on Friday revealed consumer prices in China had fallen short of expectations and registered a 0.3% deflation on a monthly basis, and 1.8% growth from a year ago. Producer prices fell 2.0% on an annual basis.

China’s government is not going to be implementing a large-scale stimulus program, Zhou Xiaochuan, Central Bank Chief, said on Saturday. China experienced the slowest rate of economic growth in 18 months for the first quarter of 2014, which prompted speculation of monetary easing.

Technical view

According to Binary Tribune’s daily analysis, in case Gold June futures manage to breach the first resistance level at $1 292.9 on Monday, the contract will probably continue up to test $1 298.2. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 301.9.

If the contract manages to breach the first key support at $1 283.9, it will probably continue to slide and test $1 280.2. With this second key support broken, the movement to the downside may extend to $1 274.9.