Gold trading outlook: futures steady after reaching 4-month low last week, stocks record-high

Gold futures traded slightly higher this morning in Europe. The improving outlook for the US economy boosted stocks to record highs last week, pressuring gold to a four-month low. Investors now eye key data from the US, due later this week.

Gold futures for delivery in August traded for $1 254.7 per troy ounce at 7:18 GMT on the COMEX in New York today, up 0.18%. Daily high and low stood at $1 255.4 and $1 251.6 per troy ounce, respectively. On Friday the contract closed for a 0.5% gain.

Meanwhile, silver contracts for July stood at $19.060 per troy ounce, for an increase of 0.36%. Daily high and low were at $19.080 and $18.985 per troy ounce, respectively. Last week the contract added about 1.5%.

“There may be some buying interest at these lower levels,” Xia Yingying, analyst at Nanhua Futures Co., said for Bloomberg. “Risks for gold prices still lie to the downside as the U.S. economy continues to show signs of improvement.”

US economic outlooks

On Friday, the US posted key employment data for May. New nonfarm payrolls stood at 217 000, as predicted, after 288 000 were added in April. Unemployment rate stood same as last month at 6.3%, which is the lowest level since September 2008, beating expectations of a slight increase.

Earlier, on Thursday 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.

Previously, ISM reported significantly growing manufacturing and services sectors in the US, boosting sentiment for the world’s top economy.

This week will feature more data from the worlds top economy. Retail sales are expected to post a preliminary 0.4% monthly growth for May, after muted 0.1% increase the previous month. Also, PPI for May will be revealed, and analysts project a 0.3% gain on a monthly basis and 1.9% year-on-year.

Stocks, SPDR

US stocks continued to score big on Wall Street, closing last week with all-time highs for all three major indices. S&P added 0.46% on Friday and logged more than 1% weekly increase with the record-high close of 1949.44. Nasdaq 100, which excludes financial institutions, also registered the highest close on record at 3794.57, with a daily gain of 0.47% and a weekly growth of more than 1.5%. Dow 30 Industrial was at 16 924.28, also at an all-time high, after a 0.52% daily gain and a total of 1% for the week.

Elsewhere, Dow Jones Euro Stoxx 50, a gauge of European stocks, also scored the highest close of all time on Friday. The index stood at 3291.98 after a daily gain of 0.75% and a weekly increase of more than 1.5%. Today, by 14:05 GMT the gauge stood for a 0.03% gain.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, remained at 787.08 for a fourth day on Friday. The fund has regained almost 11 tons over the last two weeks, after dropping more than 30 for the previous month, as the US economy scored improving results.

“Right now, nobody wants to play big on gold because they are all looking at equities,” said a precious metals trader, cited by Reuters. “With consumer demand also weak and the Ukraine situation quiet, there arent much bids out there for gold.”

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 $1 258.6, the contract will probably continue up to test $1 264.6. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 271.1.

If the contract manages to breach the first key support at $1 246.1, it will probably continue to slide and test $1 239.6. With this second key support broken, the movement to the downside may extend to $1 233.6.

Meanwhile, silver futures for July will see their first resistance level at $19.167. If it is breached, the contract will meet next resistance at $19.344, and then the third level at $19.487.

Silver will find its first support point at $18.847. Should it be breached, the second level of support is estimated at $18.704 and the third at $18.527.