Gold and silver trading outlook: futures steady ahead of ECB interest rate decision, US payrolls

Gold and silver futures were steady during early hours in Europe today, after narrow trade over the last two sessions. Investors await the crucial European Central Bank (ECB) interest rate decision, which will be revealed later today, and a key US payrolls report, due tomorrow. Lowering interest in Ukraine, and growing US stocks pressured havens recently, erasing gains on the conflict in Ukraine earlier this year.

Gold futures for delivery in August traded for $1 243.2 per troy ounce at 8:23 GMT on the COMEX in New York today, down 0.09%. Daily high and low stood at $1 245.2 and $1 241.7 per troy ounce, respectively. Yesterday the contract dropped 0.02%, and so far this week gold has lost about 0.1%, reaching a four-month low at $1 240.2 per troy ounce on Tuesday.

“Technically, the trend for gold is very clear. It is heading downwards and is likely to test support level at $1,200,” said for Reuters Mark To, head of research at Hong Kongs Wing Fung Financial Group.

Meanwhile, silver contracts for July stood at $18.760 per troy ounce, for a drop of 0.17%. Daily high and low were at $18.830 and $18.750 per troy ounce, respectively. Yesterday the contract gained 0.15%, and so far this week silver has added about 0.6%.

Economic outlooks

Eurozone

Today the Eurozone will reveal retail sales for April, and forecasts suggest an insignificant 0.1% growth on a monthly basis, after 0.3% for the previous month. More importantly, the ECB interest rate decision will be unveiled, and experts expect a decrease to 0.10%, down from 0.25%.

Yesterday the Bloc released reports on GDP growth and services PMI. GDP growth was as expected, at 0.2% on a quarterly basis, while the services sector expanded, but at a slower pace.

Previously, the Eurozone posted more disappointing CPI on Tuesday, reaffirming speculation that the European Central Bank (ECB) will indeed take steps to ease the deflationary pressure, as suggested by ECB President Mario Draghi in May.

Tomorrow more data is due. Early on, Germany will post seasonally adjusted industrial production for April, and experts forecast a standing of 0.4% growth, after a 0.5% contraction for March.

US

Later today, the US will post the weekly jobless claims report. Analysts forecast a slight increase in initial applications for unemployment benefits for the week through May 31 to 310 000, from 300 000 for the previous week.

Tomorrow the US will post key employment figures. Unemployment rate for May is expected to stand at 6.4%, after 6.3% for April. Meanwhile, nonfarm payrolls for May have probably added only 219 000, after a 288 000 figure for the previous month, signaling the US is not quite out of troubles yet.

Yesterday ADP posted preliminary figures on payrolls in the US, which stood for 179 000 new payrolls in May, well below the downgraded April reading of 215 000. Also, ISM revealed non manufacturing PMI for May to exceed expectations and pick up expansion rate by about 20%. The services sector accounts for about 80% of US GDP.

“It’s apparent that some people are fleeing the gold market and find it boring,” said for Bloomberg Lance Roberts, chief strategist for STA Wealth in Houston. “People are more upbeat about the economy and stories about political turmoil are not hogging the headlines, so there is little demand for the safe-haven gold.”

Stocks, SPDR

US stocks continued to score big gains. S&P logged a 0.19% increase as trading on Wall Street ended on Wednesday, for the all-time high close of 1927.88. Nasdaq 100, which excludes financial institutions, also registered the highest close on record at 3743.59, with a daily gain of 0.36%. Dow 30 Industrial was at 16737.53, just 0.04% below Tuesdays all-time high.

Elsewhere, Dow Jones Euro Stoxx 50 lost 0.08% yesterday, pressured by the GDP and services PMI readings. By 8:04 GMT today the index was up by 0.06%, and just 0.29% short of Mondays close, the highest level on record.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, remained at 787.08 on Wednesday. The fund has regained almost 11 tons this past week, after dropping more than 30 for the previous month, as the US economy scored improving results.

Technical view

According to Binary Tribune’s daily analysis, in case Gold August futures on the COMEX manage to breach the first resistance level at $1 248.3, the contract will probably continue up to test $1 252.2. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 255.0.

If the contract manages to breach the first key support at $1 241.6, it will probably continue to slide and test $1 238.8. With this second key support broken, the movement to the downside may extend to $1 234.9.

Meanwhile, silver futures for July will see their first resistance level at $18.875. If it is breached, the contract will meet next resistance at $18.957, and then the third level at $19.035.

Silver will find its first support point at $18.715. Should it be breached, the second level of support is estimated at $18.637 and the third at $18.555.