Gold and silver trading outlook: futures add some after strong gains for US stocks yesterday put pressure

Precious metals received limited support early today, as India reported easing of import limitations. Yesterday the detailed report of the Federal Reserves April meeting offered generous support for US stocks, pressuring gold and silver. Assets at the SPDR recorded a new six-year low on Wednesday, signaling the diminishing investor interest in havens. Elsewhere, Ukraine is also kept in focus ahead of the presidential election on Sunday.

Gold futures for delivery in June traded for $1 293.9 per troy ounce at 8:31 GMT on the COMEX in New York today, gaining 0.45%. Daily high and low stood at $1 297.0 and $1 290.1 per troy ounce, respectively. Yesterday the yellow metal fell by 0.50%, nearing a three-week low at $1 282.9 per troy ounce. So far this week the contract has lost 0.41%, as assets drop with the decreasing investor interest, amid the recovering US economy.

Meanwhile, silver contracts for July stood at $19.520 per troy ounce, adding 0.94%. Daily high and low were at $19.525 and $19.360 per troy ounce, respectively. Yesterday silver declined by 0.31% and so far this week the contract has added 0.05%.

Precious metals were eased by news that India, the second-top consumer, eased imports restrictions early today, allowing 7 more companies to ship to the country.

Previously, the World Gold Council reported India, the second-top consumer of the precious metal, saw its demand fall 26%, while imports plunged by 52% for the same period, after tough restrictions were imposed by the recently-replaced government. China, the world’s top consumer of gold, has seen an 18% quarterly drop in gold demand for the first three months of 2014. The decline was 55.4% on a yearly basis.

US economy

The Federal Reserve released minutes from its April meeting yesterday. The protocol revealed that monetary policy makers had begun laying the groundwork for the eventual discontinuation of easing. However, they remained firm in the short-to-mid term, saying that inflation and employment have not yet entered a conflicting phase, which means the full support of the Fed will remain in place in the foreseeable future.

US stocks cashed in on the Feds commitment to supporting the economy. All three major indices on Wall Street scored sizable gains. S&P 500, a broad measurement of US stocks, added 0.81% to close for 1888.03. So far this week it has increased by 0.54%, and is just 0.76% below the all-time high figure of 1902.17 from last week. Dow 30 Industrial gained 0.97%, to increase the weeks tally so far to 0.26%. Last week the index scored a record-high of 16 735.51, and as of Wednesday is within 1.21% of it, at 16533.06. Nasdaq 100, which excludes financial institutions, rose by 0.98% to stand at 3635.61, and is 2.75% behind the all-time high of 3738.32 from early March. So far this week Nasdaq 100 has added 1.35%.

Assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, fell to 776.89 tons, registering the lowest level since December 2008. The fund has lost over 30 tons in the last month, as investor interest in havens dwindles, pressured by the growing US economy.

US jobless claims data for the week through May 17 will be released later today. Expectations are that 310 000 new applications have been submitted, after last week the figure reached a seven-year low. Continuing claims are projected to stand at 2.660 million, down 7 000 from last week.

Also today, the report on existing homes sales in the US for April will be released. Experts suggest sales have grown 2.2% on a monthly basis, after a 0.2% contraction in March. Last Friday building permits recorded a six-year high and housing starts were at a six-month peak. Tomorrow will feature news on new homes sales, with expectations of growth there as well.

Ukraine crisis

Former Russian billionaire Mikhail Khodorkovsky cautioned against more sanctions on Russia, in an interview with the BBC. He expressed his belief, that further confrontation will only strengthen the position of nationalists in Moscow, and will add to isolationism and chauvinism in the country.

He suggested a more constructive approach to the crisis. Mr Khodorkovsky proposed all efforts concentrate on forging a peaceful resolution, which would not only help Ukraine, but might also prompt change in what he called “authoritarian Russia.”

Mikhail Khodorkovsky was formerly Russia’s richest man, before falling out with Mr Putin some 10 years ago. The oil tycoon was jailed for 8 years, and was released just recently, after being pardoned by President Putin.

Previously, hundreds of people attended staged rallies in Donetsk on Tuesday, after Ukraine’s richest man, Rinat Akhmetov, whose wealth is estimated at more than $11 billion, urged for a mass protest for peace. His Donbass Arena stadium hosted a crowd of several hundred chanting the Ukrainian hymn and waving the blue and yellow, in a peaceful unity demonstration.

Ukraine is preparing to hold a presidential election on May 25, and in the run-up to the vote all developments will be closely watched. Kiev hopes the election will soften the conflict, though the eastern rebels have long since declared they will boycott the vote, and will try to incorporate the separatist regions in the Russian Federation.

Technical view

According to Binary Tribune’s daily analysis, in case Gold June futures on the COMEX manage to breach the first resistance level at $1 295.3, the contract will probably continue up to test $1 302.5. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 308.7.

If the contract manages to breach the first key support at $1 281.9, it will probably continue to slide and test $1 275.7. With this second key support broken, the movement to the downside may extend to $1 268.5.

Meanwhile, silver futures for July will see their first resistance level at $19.470. If it is breached, the contract will meet next resistance at $19.603, and then the third level at $19.705.

Silver will find its first support point at $19.235. Should it be breached, the second level of support is estimated at $19.133 and the third at $19.000.