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Gold trading outlook: futures steady ahead of US payrolls, stocks record high

Gold futures were slightly higher during early trade in Europe today. Yesterday the precious metal gained, as the dollar was weakened by the rebound in the euro, following ECBs rate decision. Stocks were also very positively impacted by the ECB decision, with all four major indices closing Thursdays session with record highs. Investors now eye a payrolls report from the US, arguably the most important leading indicator for the health of the economy.

Gold futures for delivery in August traded for $1 255.1 per troy ounce at 8:02 GMT on the COMEX in New York today, up 0.14%. Daily high and low stood at $1 256.9 and $1 252.9 per troy ounce, respectively. Yesterday the contract added 0.72%, and so far this week gold has gained about 0.6%, reaching a four-month low at $1 240.2 per troy ounce on Tuesday.

“The rally is a reaction to the increased liquidity environment that ECB announced,” said for Reuters Barnabas Gan, analyst at OCBC Bank.

Meanwhile, silver contracts for July stood at $19.100 per troy ounce, for an increase of 0.13%. Daily high and low were at $19.150 and $19.025 per troy ounce, respectively. Yesterday the contract gained 1.55%, and so far this week silver has added about 2%.

Economic outlooks

US

Later today, the US will report 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.

“If that data surprises on the upside, gold should take a dip below $1,250 again,” added for Reuters Gan.

Yesterday the weekly jobless claims report for the seven day through May 31 was posted. Initial applications for unemployment benefits increased more than expected to 312 000, after 300 000 were logged for the previous week. Meanwhile, continuing claims for the week ended May 24 were reported at 2.603 million, improving on expectations and on the previous standing.

Eurozone

Earlier today, Germany, the Bloc’s top economy, posted seasonally adjusted industrial production for April. The figure was logged at a 0.2% monthly growth, after a downgraded -0.6% for March.

Yesterday the European Central Bank revealed the long-awaited interest rate decision. Borrowing costs were moved downwards to 0.15%, which is higher than the forecast 0.10%. Meanwhile, deposit rates were moved to negative territory, and now stand at -0.10%, which means ECB will tax commercial banks for keeping their money in deposit. The measures are aimed at revitalizing the European credit market, in order to breathe life into the economy and spur growth.

Also yesterday, the Eurozone, which consumes about 14% of the world’s oil supply, logged retail sales for April at 0.4% on a monthly basis, beating expectations and improving on the downgraded 0.1% growth from March.

Previously, the Eurozone posted more disappointing data and GDP at a muted 0.2% quarterly growth, while services PMI logged a slowdown in expansion of the sector.

Stocks, SPDR

US stocks continued to score big gains. S&P logged a 0.65% increase as trading on Wall Street ended on Thursday, for the all-time high close of 1 940.46. Nasdaq 100, which excludes financial institutions, also registered the highest close on record at 3776.95, with a daily gain of 0.89%. Dow 30 Industrial was at 16 836.11, also at an all-time high, after a 0.59% daily gain.

Elsewhere, Dow Jones Euro Stoxx 50 added 0.89% yesterday, on ECBs decision to support the economy, to close for an all-time high of 3267.39. By 7:20 GMT today the index was up by a further 0.03%.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, remained at 787.08 on Thursday. 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 $1 260.4, the contract will probably continue up to test $1 267.5. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 277.1.

If the contract manages to breach the first key support at $1 243.7, it will probably continue to slide and test $1 234.1. With this second key support broken, the movement to the downside may extend to $1 227.

Meanwhile, silver futures for July will see their first resistance level at $19.269. If it is breached, the contract will meet next resistance at $19.454, and then the third level at $19.754.

Silver will find its first support point at $18.784. Should it be breached, the second level of support is estimated at $18.484 and the third at $18.299.

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