Gold trading outlook: futures steady ahead of US retail sales report, stocks lower

Gold futures were largely unchanged during morning trade in Europe today. The US will reveal retail sales for May later today, a key indicator, followed closely by investors. Wednesdays Wall Street session recorded losses for stocks, after five straight sessions of record-highs.

Gold futures for delivery in August traded for $1 261.5 per troy ounce at 7:47 GMT on the COMEX in New York today, up 0.02%. Daily high and low stood at $1 262.8 and $1 260.0 per troy ounce, respectively. Yesterday the contract added 0.09%, reaching a 10-day peak at $1 265.5 per ounce, and so far this week gold has advanced 0.7%.

Meanwhile, silver contracts for July stood at $19.205 per troy ounce, for a gain of 0.17%. Daily high and low were at $19.235 and $19.150 per troy ounce, respectively. Yesterday the contract was unchanged at closing, though it reach a two-week high earlier at $19.330 per ounce, and so far this week silver has added 0.9%.

Several reports on the US economy will be posted today. The key preliminary figure on retail sales is expected to stand for 0.4% monthly growth for May, after muted 0.1% increase the previous month. Meanwhile, core retail sales, which exclude automobiles, are expected to record a 0.4% growth on a monthly basis. Retail sales are indicative of consumer spending, which generates about 80% of US GDP.

Also today, jobless claims will be posted, with expectations of unchanged weekly figures at 310 000 new applications and 2.6 million continuing claims. Later, PPI for May will be revealed on Friday, and analysts project a 0.3% gain on a monthly basis and 1.9% year-on-year.

“While gold has seen a bit of bounce, the outlook for prices remains negative as U.S. economic data continues to improve, supporting strength in the stock markets and tapering by the Federal Reserve,” Sarah Xie, research analyst at Hong Kong-based Wing Fung Financial Group Ltd., said for Bloomberg.

Usually, when outlooks for an economy improve, appetite for stocks of companies present on that market increases. The higher profits prospects stoke greater risk-reward investments, shifting investor demand from safe havens, such as gold, towards equities, and there is usually an opposite correlation between stocks and havens.

Stocks

Yesterday US stocks recorded the fourth session to close lower, out of the last eighteen, after consecutive record-highs over the previous five sessions. Dow 20 Industrial was 0.60% lower, S&P 500 dropped 0.35% and Nasdaq 100 was down 0.08%. Dow Jones Euro Stoxx 50, a gauge of European stocks, also recorded a sizable loss on Tuesday, dropping 0.66%. Today, by 7:31 GMT the gauge stood for a 0.02% increase.

The US dollar index, which measures the greenback against six other major currencies, is up 0.41% this week and is hovering near a four-month high.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, remained at 787.08 for a seventh session on Wednesday. The fund has regained almost 11 tons over the past two weeks, 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 $1 265.2, the contract will probably continue up to test $1 269.1. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 272.8.

If the contract manages to breach the first key support at $1 257.6, it will probably continue to slide and test $1 253.9. With this second key support broken, the movement to the downside may extend to $1 250.0.

Meanwhile, silver futures for July will see their first resistance level at $19.286. If it is breached, the contract will meet next resistance at $19.401, and then the third level at $19.471.

Silver will find its first support point at $19.101. Should it be breached, the second level of support is estimated at $19.031 and the third at $18.916.